Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Gulf Crisis

Dr. Kim Howells: To ask the Secretary of State for Defence how many merchant ships the Government have requisitioned for the purposes of transportation during the present Gulf crisis.

Mr. Hardy: To ask the Secretary of State for Defence what is the total strength of United Kingdom service men currently stationed in the middle east; and what forces have been sent by the Community member states.

Mrs. Currie: To ask the Secretary of State for Defence if he will make a statement about developments in the Gulf.

Mr. Hind: To ask the Secretary of State for Defence if he will make a further statement on the deployment of British forces in the Gulf.

The Secretary of State for Defence (Mr. Tom King): We have now deployed to the Gulf the 1st Armoured Division, Royal Air Force Tornado, Jaguar and other aircraft, four destroyers and frigates, mine counter-measures ships and Royal Fleet Auxiliary support vessels. That totals some 35,000 service personnel. Deployment of those forces has involved the chartering of more than 100 vessels but not the requisitioning of any merchant shipping.
In addition to the substantial United States forces and those of Saudi Arabia, Syria and Egypt, many European countries are involved. France has committed naval, land and air forces. Italy has committed naval and air forces. Belgium, Denmark, Greece, the Netherlands and Spain have sent navel vessels and Portugal is providing naval transport for the United Kingdom.
Since the conflict commenced, the Royal Air Force has carried out more than 400 operational sorties as part of the allied campaign to liberate Kuwait. I regret to inform the House that a further Tornado aircraft based in Saudi Arabia was reported missing this morning, and the families of the crew have been notified. Four Tornado aircraft have been lost in enemy action since the campaign began. The air campaign is continuing today. As a further illustration of the level of co-operation between the allies, I am pleased to announce that a party of New Zealand defence force medical personnel will be attached to British forces in the Gulf. That contribution is to be greatly welcomed.

Dr. Howells: I am sure that the whole House will echo my regret that the crew of a Tornado have been reported missing. I am sure that hon. Members hope that they will be safe. Why is such a tiny proportion of chartered transport shipping registered under the British flag? If those men, wherever they be from, are brave enough to sail into a war zone in the Gulf, they should be able to enjoy the conditions of work offered by registration under the British flag. It is a disgrace that they are not. If they are prepared to die for this country, they should enjoy the albeit too few benefits that go with the job.

Mr. King: The hon. Gentleman may know that the president of the General Council of British Shipping has made that point. British shipping is not unwilling to be involved but is simply busily engaged on other contracts. It has been possible to requisition ships to meet our needs without asking British companies to break their other contracts. This has been a successful deployment, in which a significant number of ships have been involved. We arc grateful for the co-operation of all those involved.

Mr. Hardy: As many in Europe oppose the Hussein regime in Iraq, deplore the aggression in Kuwait and voted for the removal of the aggressor from Kuwait, and given the disproportionate and significant contribution made by British service men in the Gulf, does not the Minister believe that it would now be appropriate for him and his colleagues to suggest to our European partners that they must reconsider their position, perhaps in response to their votes at the United Nations and the contribution that their nationals, as well as ours, made in building up the military capacity of Saddam Hussein?

Mr. King: I confirm that we have encouraged the maximum contribution from our European allies. I have attended two meetings of the Western European Union at which we emphasised that it was important in the present position that Europe be seen to make an effective contribution and to support not merely with its votes but in a real way the efforts that have been made by Saudi Arabia, Egypt, Syria and, pre-eminently, the United States. Europe should be present, too. In addition to the contributions of forces that I have described, we have been grateful for a significant number of contributions of hardware, vehicles and ammunition from some of our NATO allies.

Mrs. Currie: Does my right hon. Friend agree that the appalling and inhumane treatment of our prisoners of war in Iraq demonstrates yet again exactly what sort of cruel and brutal dictator we are up against? Should not the message that goes from here to Saddam Hussein today be that his actions will make us not less but more determined to see him off? Can my right hon. Friend report any progress in making contact with our prisoners of war by the Red Cross or the Red Crescent or one of the other voluntary humanitarian organisations?

Mr. King: I very much agree with the comments of my hon. Friend. As I advised the House last night, representatives of the International Committee of the Red Cross were here yesterday. As they requested, they were given access to the Iraqis in detention. They then intended to return to Geneva and seek to make immediate contact with Baghdad. I have not yet had a report today on what success they have had. I advise the House—it endorses what my hon. Friend said—that I was speaking this


morning to General Sir Peter de la Billiére, our commander in the middle east, who this afternoon was to receive the first visitors from Denmark, Norway and Sweden. They are the advance party for the medical facilities that we are preparing in order to honour our obligations under the Geneva convention to make sure that any Iraqi prisoners of war receive proper medical treatment if they need it. I confirm that the representatives of the ICRC have visited Saudi Arabia and inspected the arrangements that we propose to make for any prisoners of war we take. The committee said that it was very satisfied and impressed with the arrangements that we are making. That further underlines the fact that we are absolutely entitled to expect that treatment for our prisoners of war too.

Mr. Trotter: I refer my right hon. Friend to the case of Flight Lieutenant Adrian Nichol, whose parents come from my constituency. Our thoughts are with the families of all those who are prisoners at this time. The bravery shown by Adrian and his colleagues is matched by the bravery shown by his parents. Their relief that he survived being shot down has been replaced by their anxiety about his treatment as a prisoner. Will my right hon. Friend reaffirm that there can be no qualification whatever of the obligation to apply the Geneva convention? Is he aware that the Iraqi ambassador said to me this morning that there was a way of not applying the convention? Will my right hon. Friend confirm that that is not true and that Iraq must apply the convention?

Mr. King: That is absolutely right. I know that my hon. Friend has taken the closest interest in the case on behalf of his constituents, Mr. and Mrs. Nichol, and that he has seen the Iraqi ambassador. I am grateful to my hon. Friend for that. He is absolutely right to say that Iraq is a party to the Geneva convention and it cannot pick and choose which bits of the convention it applies. We demand without qualification that, just as we shall extend to any Iraqi prisoners of war the rights to which they are entitled under the convention, because we are a party to it, those rights must be extended to our prisoners of war. I hope that the message has got through to Baghdad that, far from being helpful in the remotest way to the Iraqi cause or undermining the allied resolve, showing the films has only added to the determination of the population of Italy, the United States and Britain to back up our forces at this dangerous time.

Mr. O'Neill: I echo the Secretary of State's sentiments on that point. The House is united in our detestation of the manner in which our prisoners have been treated. I also put on record our respect for the bravery of all the men, including those who got back, and our appreciation of the work of those who have enabled them to get into the air and to make sorties at the fantastic rate that they have achieved.
Will the Secretary of State give the House an assessment of what the cost of deploying our troops has been? We have had a number of figures—some gross, some net. What success has he had in securing support from other countries, in particular Germany, which by treaty is incapable of participating in the exercise, and from Japan, which, by dint of its wealth and its interest in oil, has more than a right to make contributions, not only to the United States but to the support of our forces?

Mr. King: The hon. Member knows these subjects very well and is right to emphasise the difference between the gross and net costs. We are certainly seeking the maximum contributions from those who, for one reason or another, have not felt able to make military contributions to the allied effort, to ensure that they at least make the maximum financial contribution. We have already received in different ways such contributions from Japan and Germany and we shall see how we can maximise those. We have had host nation support from the Kingdom of Saudi Arabia. As for the overall figure, we have already had authority in the House for a further £450 million. I have told the House that we think that there is a daily cost of £3·6 million. I am examining those figures. I shall write in greater detail to the hon. Member and place that letter in the Library of the House.
I thank the hon. Gentleman for what he said about standing together on such matters. There is a need for us, as a country, to stand together. I regretted having to inform the House about the loss of a further Tornado. I told the House that the families had been advised that the air crew are missing. Where we can, we propose to adopt a policy of releasing the names of the air crew as soon as possible, but only with the family's consent. In the latest case, we have not yet had the agreement of the families involved; although I know that the media will be most concerned to have access to the names, it is precisely because of the families' fear of harassment from the media that they are nervous about allowing the names to go forward. Therefore, I stress, as I did last night, that we should stand together as a country at a dangerous time. I am sure that the media will understand the point that I am making.

Mr. Burns: To ask the Secretary of State for Defence what proportion of members of the armed forces in the Gulf are women; and what duties they undertake.

The Minister of State for the Armed Forces (Mr. Archie Hamilton): More than 800 service women are serving with their units in the Gulf. They perform a range of duties.

Mr. Burns: In paying tribute both to the men and to the women of our armed forces in the Gulf, may I ask my hon. Friend whether, if a land war developed, there would be any conceivable circumstances in which women serving officers in the armed forces would be fighting in the front line?

Mr. Hamilton: There are no women employed in combat units in the ground forces, but there might well be women employed further back from the front line; they would have weapons for their own self defence and expect to use them.

Mr. Corbett: Is the Minister aware of complaints by women as well as men serving in the Gulf about the great delays in receiving post from the United Kingdom? One of my constituents tells me that post offices accept parcels for delivery only at first-class rates. Will the Minister undertake to look at that problem?

Mr. Hamilton: We have already considered the question of parcels and I can assure the hon. Gentleman that if parcels are sent by the inland rate they will reach the Gulf in about 10 days. There are a number of post offices where staff still do not seem to understand the position and thus talk in terms of charging people an air mail rate,


which can be high if there are many goods in the parcel. We are concentrating hard on the letter post and doing all that we can to maintain a swift service.

Dame Peggy Fenner: Following complaints by the Kent Gulf Forces Support Group, we have been in touch with the Post Office, whose representatives have assured us that they are issuing instructions to all counter staff today so that they give the right help to the wives of our service men. Will the Department ensure that, whether it is a departmental or Post Office matter, the "blueys"—the special forms that can be sent forces mail—are available because, unfortunately, supplies ran out a day or so ago? I know that my right hon. Friend will accept that the families have enough anxiety without little things like this to niggle them.

Mr. Hamilton: I am very grateful to my hon. Friend for her advice in relation to the instruction given by the Post Office. Several hon. Members have remarked to me that post offices have run out of blueys and the matter is being investigated. I suspect that the difficulty arises from maldistribution, as about 6 million were issued to the Post Office. We suspect that there may be quite large quantities at some offices, but none at others.

British Force Reductions (Germany)

Mr. Redmond: To ask the Secretary of State for Defence if he will make a statement about reductions in British forces in Germany.

Mr. King: As I said in the House last night, we are continuing to study with our allies the proposals for change in the structure and deployment of our armed forces—proposals that have emerged from the work on "Options for Change".
We intend to proceed with the implementation of rationalisation proposals and other support changes in areas that do not affect our efforts in the Gulf. We shall make further announcements about our proposals in due course.

Mr. Redmond: I thank the Secretary of State for his reply. Does he agree that, in the light of Government statements that it is the British nuclear deterrent which has maintained the peace in Europe, it would make economic sense to bring the British forces home, in view of the escalating cost of keeping them in the Gulf?

Mr. King: I am not sure that I entirely follow the logic of the hon. Gentleman's question. Our defence policy is well balanced, as set out in our proposals in "Options for Change". Of course, there is a very grave situation in the Gulf and the very uncertain developments in the Soviet Union may also pose problems, but I believe that the approach that we have adopted is the right one to ensure that, whatever changes are made, a strong defence capability for this country will be ensured at a time of great uncertainty in the world.

Sir Geoffrey Johnson Smith: My right hon. Friend's answer concerning the work done under "Options for Change" will be widely welcomed on both sides of the House. We recall that in announcing the exercise he warned us that the situation in Europe, as well as that in the middle east, should be taken fully into account. Can he

reassure the House today that work on "Options for Change" will not be resumed until the lessons of the Gulf have been fully absorbed?

Mr. King: On that matter I can give a partial assurance. Certainly, I am very concerned to see that in areas where our capability in the Gulf could be affected, in the sense of a need to ensure the provision of adequate resources, the situation is not affected by our work. My hon. Friend will understand, however, that there are other areas involving the infrastructure of the services. There would be absolutely no point, for instance, in keeping redundant airfields. There are also other activities that need to be addressed. I am thinking, for instance, of the scale of some of our infrastructure in Germany. We have to make sure that we can sustain what is, without question, a very expensive commitment in playing our full part in the liberation of Kuwait. To that end, we must ensure that we do not waste money in areas in which expenditure simply cannot be justified.

Mr. Menzies Campbell: Does the Secretary of State agree that the aspiration of all parties in the House to reduce expenditure on defence needs to be tempered with realism, especially at this time? Would not it be irresponsible to make long-term judgments about force levels before the operations in the Gulf had been completed and the current uncertainties in the Soviet Union had reached a stage at which a considered judgment might be made as to the consequences? Does he agree that this is a moment at which a very considerable degree of caution is to be found in the steps being taken within the Ministry of Defence?

Mr. King: We have approached this whole exercise with a very considerable degree of caution. When I made my statement on 25 July I said, in relation to developments in the Warsaw pact—which many people might have felt at that time were moving in an entirely hopeful direction—that, while it was clear that there were opportunities, there were also risks in Europe and, elsewhere, some worrying trends with regard to the proliferation of missiles. I think that now, with the impact of Scud missiles in the Gulf, people understand why I warned about the risks of the unexpected and about the need to ensure the maintenance of an adequate defence capability.
There are major lessons to be learnt from the Gulf situation, particularly about the strength of the Army units and the amount of reinforcements that may be necessary to ensure that they have the required fighting capability. We are having to draw on reserves as well. I assure the hon. and learned Gentleman that we shall learn those lessons.

Low Flying

Mr. Amos: To ask the Secretary of State for Defence if he will make a statement on the amount and safety of low-flying activity over Northumberland.

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Kenneth Carlisle): My Department's aim is to distribute military low flying over the widest practicable area of the United Kingdom, including Northumberland. The amount is, however, kept to the minimum necessary to meet our requirements and all aspects of flight safety are kept under continuous review.

Mr. Amos: As one who has always accepted the necessity for low-flying activity, but who has made representations about it on behalf of constituents, may I ask my hon. Friend to pass on to the RAF the whole-hearted support of the people of Northumberland for the skill, courage and professionalism shown by RAF pilots? One of the prisoners of war comes from the north-east, so will my hon. Friend confirm that, unless Iraq strictly adheres to the Geneva convention in all circumstances and at all times, Saddam Hussein will be tried as a war criminal and executed with no ifs and buts?

Mr. Carlisle: I am grateful to my hon. Friend who has always argued for his constituents. Low flying can be a nuisance, but it is the key to success in many of our operations in the Gulf. Had they not practised this difficult skill, our men and planes would be at greater risk. I join my hon. Friend in his tribute to the courage and dedication of the RAF, whose feats merit our admiration. On my hon. Friend's last point, I can confirm that yesterday my right hon. Friend the Prime Minister gave the sternest warning that those who violate the Geneva convention will be held responsible.

Mr. Beith: Now that the operational value of low flying has been clearly demonstrated, and the skills involved so courageously used, does the Minister share my hope that other areas of the country will be keen to share the burden of low-flying training that Northumberland now carries?

Mr. Carlisle: As the hon. Gentleman knows, we aim to spread low flying as wide as possible, so that there is as little disturbance as possible. I know that the House has immense admiration for the feats of the RAF in the Gulf and the skills that the pilots need have been learnt over many hours of practice over the hon. Gentleman's constituency and those of other hon. Members representing such areas. We are grateful for the tolerance of the public, who I believe now understand why that training is so vital. Those skills are essential if we are to press home attacks in the face of fierce opposition.

Mr. John Greenway: Low-flying Tornados over Northumberland on training exercises quickly arrive over North Yorkshire and, as my hon. Friend the Member for Hexham (Mr. Amos) said, they have been the cause of some nuisance and inconvenience. Is my hon. Friend the Minister aware, however, that the people of North Yorkshire salute the courage and bravery of our air crews and their valiant efforts in the past few days in the Gulf, and are convinced that everything that the Ministry of Defence has said about the tactical value of low flying has been proved and vindicated?

Mr. Carlisle: I am grateful to my hon. Friend and I repeat that we are grateful to the public for their tolerance of low-flying practice. As I said, the skills involved are crucial in the Gulf war and we should remember that lesson in the future.

HMS Warspite

Mr. McCartney: To ask the Secretary of State for Defence if he will make a statement on the reason for his decision to decommission HMS Warspite.

Mr. Archie Hamilton: As my right hon. Friend announced to the House last year, we envisage a future

submarine force of about 16 boats, around three quarters of which will be nuclear powered. As there were 17 nuclear submarines in the fleet on 25 July, a number of older boats, including HMS Warspite, are being decommissioned.

Mr. McCartney: Have not the Government have already wasted £100 million in a refit for this submarine, despite the fact that they knew in their private reports of the likelihood of the need to decommission because of problems with its reactor? Will the Minister advise the House what will be the cost of decommissioning Warspite, and are there any other submarines of a similar type which in the next few years will have to be decommissioned because of problems with their nuclear reactors?

Mr. Hamilton: I cannot comment on the material state of nuclear submarines. However, I would point out to the hon. Gentleman that we are decommissioning the oldest submarines that we have, which seems to be a very sensible thing to do in terms of taking out those that are least capable.

Dame Janet Fookes: While there may be a case for decommissioning this particular nuclear submarine, may I invite my hon. Friend to reconsider the wisdom of reducing the nuclear submarine fleet in the light of the uncertainties in the world at present and the fleet's undoubted flexibility?

Mr. Hamilton: Yes, I fully accept what my hon. Friend says about the flexibility of nuclear submarines. However, under "Options for Change" we have given serious consideration to the United Kingdom's requirements in the light of changed circumstances in Europe. In this context we believe that 12 nuclear submarines is about the right number.

Reservists

Mr. Cohen: To ask the Secretary of State for Defence if he will make a further statement on the call-up of reservists and his policy on conscription.

Mr. Bill Walker: To ask the Secretary of State for Defence if he can give details of the Royal Air Force reservists who have been invited to enlist for the Gulf.

Mr. Tom King: Some 1,200 reservists are already making an important contribution to Operation Granby and I have been impressed by the excellent way in which they have responded. The largest category are Army medical reservists needed for hospitals in the United Kingdom and the Gulf; an aeromedical evacuation squadron, Royal Auxiliary Air Force, has specialist skills in moving injured by air. Members of No. 4624 movements squadron, Royal Auxiliary Air Force, were called out recently to help with the huge logistical task. We will shortly be calling out about 450 members of the Royal Fleet Reserve who have expressed a willingness to serve. We have no plans whatsoever to introduce conscription.

Mr. Cohen: Were not we told that this war would be over in days rather than weeks and then weeks rather than months? Now the Prime Minister says that we are not to expect a quick victory. Were not we told of the success of the high-tech war machine, only for the Minister of State for the Armed Forces to tell us that the Scud launchers were plywood? Similarly, after a Somme-in-the-sand land


battle, will not we be introducing conscription whatever the Minister says today? This Government cannot offer our boys a job, but they can arrange their deaths.

Mr. King: The answer to the hon. Gentleman's question, since I have already answered it precisely, is no, Sir.

Mr. Bill Walker: Is my right hon. Friend aware that members of the Royal Auxiliary Air Force and the Royal Air Force Volunteer Reserve who thus far have been requested to serve have been delighted to do so? Is he also aware that other members of both these organisations would quite gladly give up their time for this service? This is the result of their having been volunteers in every sense, but there are occasions when some employers may not understand their enthusiasm. I hope that the Minister and his Department will handle this matter so as to make it easy for these volunteer attitudes not to give offence to employers.

Mr. King: I am grateful to my hon. Friend for his comments. I did have worries as to how easy it would be to recruit volunteer reserves and for the reservists to go. I have been deeply impressed by the tremendous willingness of those concerned. I have given the figures to the House. We now have 1,200 reservists coming out of their previous occupations and giving their help in critical areas where it is needed. It has been most impressive and encouraging support to receive.

Mr. Allen: Will the Secretary of State make it clear to the reservists who are about to be called up, to the public and to Parliament whether the reservists will be engaged in what is technically an armed conflict or whether 13ritain will declare war officially? Will he assure the House that before war is officially declared, Parliament will be able to ratify and endorse that decision?

Mr. King: The hon. Gentleman did not listen to my answer. We are talking about medical personnel—the aeromedical evacuation squadron, which will accompany casualties back to Cyprus and Britain and which will certainly not be involved in conflict, and the movements squadron, which will be involved in helping to ensure that supplies move smoothly through British airfields and along the logistic chain to the Gulf, which will also clearly not be involved in conflict.

Mr. Allen: In view of the inadequacy of that answer, I give notice that I shall seek to raise the question on the Adjournment of the House.

Mr. Speaker: Order. I regret that the hon. Gentleman cannot do that because he did not ask the original question.

Mr. David Evans: Does my right hon. Friend agree that our reservists and forces serving in the Gulf will be heartened by the almost unanimous vote in the House last night? Does he further agree that it is sad that it could not be a unanimous vote as 34 Opposition Members could not find it in their hearts to vote in support of our forces? Is it not interesting that they are exactly the same people who will not pay their community charge, and is it not a fact that they do not respect international law—[Interruption.]

Mr. Speaker: Order. The hon. Gentleman's question is miles wide of the main question.

Mr. King: Those who were unable to support the motion and the amendment last night must speak for themselves. I am concerned about what my hon. Friend says and I would simply say that when I spoke to General de la Billiére this morning and assured him of the tremendous vote of the majority of the House in support of the task that we have asked him and the forces under him to undertake, he said that that would be the most enormous encouragement to them in the challenging time that they face. I express my appreciation to all those who voted in that majority.

Mr. Reid: Does the Secretary of State accept that the uncertainty faced by the reservists and, perhaps more importantly, by their families and the families of those deployed in the Gulf must give us cause for consideration? Does he accept that a key element of the morale of reservists and troops already deployed is the security of knowing that their families here in Britain are well and sensitively cared for by the rest of the community and by the Government? Will he acknowledge the tribute that we have paid to those families and the magnificent role that is played in caring for them by the Soldiers, Sailors and Airmen's Families Association? Finally, what do the Government intend to do and what have they already done to assist the SSAFA in caring for those service families? Will he join me in urging members of the public to do everything possible to assist the SSAFA in the important and magnificent role that it is playing?

Mr. King: I am extremely grateful to the hon. Gentleman for the points that he has made in his supplementary question. I join him in paying a warm tribute to the SSAFA. I repeat what I said yesterday about the setting up of the Gulf trust. That will go through to the service benevolent funds and will indirectly help the SSAFA to help the organisations to do the best that they can for the families involved. I also join the hon. Gentleman in expressing our greatest admiration for the families of all those in the Gulf. Our thoughts are with them.

EH101 Helicopters

Mr. Colvin: To ask the Secretary of State for Defence if he will confirm his order for 25 utility EH101 helicopters.

The Minister of State for Defence Procurement (Mr. Alan Clark): Decisions on support helicopters have been delayed by the need to take into account the implications of changes in Europe. I hope that the position will be clearer in some months' time.

Mr. Colvin: Is not it a pity that the Government cannot re-endorse the order for 25 support helicopters and authorise Westland to proceed with phase 2 of the project definition? I do not believe that "Options for Change" should be used as an excuse for further delay, particularly as experience in the Gulf and in Northern Ireland shows that our support helicopter force is seriously extended. In the Gulf in particular it has had to call upon the Royal Navy to help it out.

Mr. Clark: I note that my hon. Friend has played a very conspicuous and distinguished part in advocating the choice of this aircraft. However, he very well knows that project definition work is examining in detail the Royal Air


Force's foreseen requirements and it has to do so against a whole range of options and to establish more firmly the costs and the risks involved. The analysis of these findings is taking longer than was expected.

Gulf Crisis

Mr. Batiste: asked the Secretary of State for Defence if he is satisfied with the performance of Vickers plc in supporting the British forces in the Gulf.

Mr. Alan Clark: Yes. Vickers has made considerable effort to support the British forces in the Gulf both in providing spare parts and modification kits. It has sent a team of its own technical advisers to the theatre. Both my Department and the forces on the spot are very satisfied with its performance.

Mr. Batiste: Is not it a fact that one of the lessons that can be learnt from what my right hon. Friend has just said is that there is and will remain a continuing need for a strong and flexible United Kingdom defence industry that is capable of supporting United Kingdom forces wherever in the world they may be deployed?

Mr. Clark: My hon. Friend is right. Certainly, the support that we have received from Vickers is of the greatest importance and has impressed not only our forces but those of our allies.

Mr. Boyes: Is the Minister aware that recently I visited Vickers in Newcastle and saw both the excellent Challenger tank and the repair and recovery vehicles? I also saw on video the successful operations in the desert. If, unfortunately, ground forces are to be used in major action the Challenger tank will ably support British forces. Will the Minister join me in sending a message of confidence to the management and skilled work force in Newcastle?

Mr. Clark: Yes, very gladly. I particularly welcome the hon. Member mentioning the armoured recovery vehicles which are being sent out to the Gulf as fast as possible. They are in full production at that factory. We have the heaviest and most powerful of all the armoured recovery vehicles available to the allied forces and these have been the subject of very favourable comment on all sides.

Mr. Conway: Will my right hon. Friend pay a particular tribute to those civilians who have remained in the Gulf to adapt and maintain the main battle tanks, particularly those who are associated with the engines that Vickers use, which are made in Shrewsbury and which make the British-made battle tank far superior to any alternative? They are doing a superb job and will not let our forces down.

Mr. Clark: Yes, indeed. Their specialist knowledge is invaluable and I echo my hon. Friend's tribute to their steadfastness in staying on in the Gulf.

Polaris

Mr. Douglas: To ask the Secretary of State for Defence if he will make a statement on the current repair and maintenance programme of the Polaris fleet.

Mr. Archie Hamilton: It is not our practice to publish details of nuclear submarine refit, repair or maintenance programmes.

Mr. Douglas: Is the Minister therefore quite sanguine about the press reports relating to the technological failures in the reactors of the Polaris PWR? Will he comment on the vexatious problems that we are having at Rosyth in relation to the disposal of nuclear waste? Will he take it from me that it is quite unacceptable that Rosyth should be the sole base for the disposal of nuclear waste and that the Plymouth and Devonport waste should be redistributed to Scotland? Will he comment on these observations?

Mr. Hamilton: We do not comment on the material state of our nuclear submarines. However, I can reassure the hon. Gentleman that there is no question of operating any of our submarines unless we are convinced that they can be operated safely. The issue of the nuclear waste sites has still to be decided and in the meantime we are quite happy with the provision that has been made for the disposal of waste from nuclear submarines.

Mr. Franks: May I take the opportunity provided by the hon. Member's question to remind the Minister that the Polaris fleet was designed and built in Barrow? If there is to be a change of policy and location for the repair and maintenance of that fleet will he bear in mind the ability and skills that are readily available in Barrow?

Mr. Hamilton: I thank my hon. Friend for reminding the House that Barrow is very interested in the future refitting of nuclear submarines.

Submarines

Mr. Wigley: To ask the Secretary of State for Defence what representations he has received concerning improvements to the technology available to Royal Navy submarines to enable them to identify fishing vessels and their nets in the vicinity of their operations.

Mr. Archie Hamilton: A large number of firms have submitted proposals for pinger devices that will make fishing nets more easily detectable to dived submarines. Trials carried out with such a device last month were a success, and a further series of trials will take place in the near future.

Mr. Wigley: In view of the tragic accident off the Scottish coast not so long ago, and following a series of accidents in the Irish sea involving Welsh fishing vessels, will the Minister ensure that all the resources necessary will be provided to ensure that such devices are made available as soon as possible, to avoid any further loss of life?

Mr. Hamilton: I give that undertaking and assure the hon. Gentleman that a competitive evaluation of a range of commercially produced devices will take place early this year.

Oral Answers to Questions — PRIME MINISTER

Engagements

Q.1. Mr. Beaumont-Dark: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister (Mr. John Major): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Beaumont-Dark: Does my right hon. Friend agree that we can all share an understanding of the appalling strain to which the families of service men and women serving in the Gulf are subject at this time? I refer in particular to the family of Flight-Lieutenant Peters in the constituency of my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight). We have all seen the outrageous photograph of Flight-Lieutenant Peters, which has been used so cruelly. My right hon. Friend the Secretary of State for Defence made reference to the inspirational courage of the men doing the fighting. Does my right hon. Friend the Prime Minister agree that the steadfast courage of their families at home, who have to wait for the warriors to return, is also deserving of all our support?

The Prime Minister: I entirely agree with my hon. Friend, whose views will be shared throughout the House. The families of those serving in our forces, and most especially of those who have been captured, are suffering a special agony at this time. We send them all our sympathy and we appreciate the courage that they, too, are showing.

Mr. Kinnock: I associate myself with the Prime Minister's remarks. Does he agree that the relatives of airmen missing in the Gulf conflict have enough to put up with without having to contend with a prying press? Does he share my view that uninvited intrusions into the lives of very anxious people cannot serve any public interest whatsoever? Will he take this opportunity to appeal to editors to desist from any invasions of privacy?

The Prime Minister: I am grateful to the right hon. Gentleman. It is standard practice not to disclose the names of those killed without the consent of their families, and I hope and expect that convention to be observed throughout the conflict. I share the right hon. Gentleman's view that people are entitled to privacy at a time of grief and I hope that their privacy will be respected by everyone.

Mr. Patrick Thompson: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer my hon. Friend to the answer that I gave some moments ago.

Mr. Thompson: Does my right hon. Friend agree that those industrial nations that are not committing forces to the Gulf can assist by making increased financial contributions to those bearing the expense of upholding the United Nations rule of authority?

The Prime Minister: Yes, I agree with my hon. Friend. Some of the countries concerned have constitutional restrictions against committing forces and some are already contributing substantial funds. However, as the costs mount, I hope that we may look to them to contribute further to the communal costs.

Mr. Trimble: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer the hon. Gentleman to the answer that I gave some moments ago.

Mr. Trimble: Is the Prime Minister aware that many of us admire the way in which he and his Government have handled the middle east crisis? In particular, we like the vigour of the Government's response, their clarity of purpose and their refusal to allow themselves to chase after the mirages of diplomatic and political initiatives. Does the right hon. Gentleman realise that we see a sad contrast in the Government's response to Irish republican terrorism, which claimed yet another innocent victim in Ulster yesterday? The Government have allowed themselves to be mired down in political action that has inhibited the response that should be made. Will the right hon. Gentleman bring to Ulster the same clarity and vigour with which he has pursued the Gulf crisis?

The Prime Minister: I am grateful to the hon. Gentleman for his initial remarks. We have the same opposition to terrorism in northern Ireland as we have to terrorism in the Gulf, and we shall continue to keep that view firmly in mind.

Mr. Moate: Does my right hon. Friend agree that, while our attention is rightly focused upon the allied forces in the Gulf today, it would also be right at this time to pay tribute to the late King Olav of Norway who, in times of war and peace, did so much to cement the strong links of friendship between Norway and the United Kingdom?

The Prime Minister: Yes. I am grateful to my hon. Friend. King Olav was enormously popular in this country and there is a real affection in the hearts of many people here who came to know him. I am sure that the House would wish to join me in sending our sincere condolences to Her Majesty the Queen on the death of her cousin, and on the death of a very good friend to this country.

Homelessness

Mr. Corbyn: To ask the Prime Minister what meetings he plans to have with representatives of the homeless in London.

The Prime Minister: I have no plans to do so at present. Ministers at the Department of the Environment regularly meet voluntary agencies that deal with the problem of homelessness. The most recent such meeting was on 17 January.

Mr. Corbyn: Is the Prime Minister aware that tonight more than 3,000 people will be sleeping on the streets of London, that 20,000 families are living in bed-and-breakfast accommodation in London and that last year there was an 11 per cent. increase in the number of people declared homeless in the capital city? In the midst of this homelessness crisis in London, will the Prime Minister make resources available for local authorities to build and to buy homes for rent, rather than creating bed-andbreakfast millionaires and paying money to companies for leasing properties? Does the Prime Minister agree that growing up in overcrowded bed-and-breakfast accommodation, or in shared housing, casts a blight over children's whole lives and that they should be allowed to grow up in the same decency that we would want for ourselves?

The Prime Minister: I wish to see people, and most especially children, properly housed. There is no dispute between the hon. Gentleman and me on that matter. Perhaps the first and the most helpful thing that can be done is for a large number of London authorities, including Islington, to bring into use the large number of empty properties that they own. As the hon. Gentleman knows, a few weeks ago my hon. Friend the Minister of State announced a substantial increase in resources to deal with the problem of homelessness in London.

Mr. Tracey: Further to what my right hon. Friend has just said, could he also look into the millions of pounds in uncollected rents which Labour councils in London are failing to collect? That money could also be channelled to help the homeless in a most constructive way.

The Prime Minister: My hon. Friend makes a perfectly fair point.

Engagements

Mr. Harry Barnes: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer the hon. Gentleman to the answer that I gave some moments ago.

Mr. Barnes: Does the Prime Minister accept that a concern for the well-being of British troops and a concern for the well-being of Iraqi citizens are not incompatible and in fact reinforce each other? Will he tell us the number of casualties in Basra, in southern Iraq, which is a prime target because of its docks, railway marshalling yards and other facilities, including massed Iraqi troops?

The Prime Minister: There are no means by which I could know those figures, as the hon. Gentleman knows. He also knows, for it has been repeatedly stated from this Dispatch Box in the past few days, that allied pilots—all of them—have a firm instruction to attempt to avoid civilian casualties wherever possible.

Sir George Gardiner: In view of Saddam Hussein's despicable treatment of prisoners of war, on top of other crimes against humanity, does my right hon. Friend agree that the destruction of Saddam Hussein is now a legitimate war aim?

The Prime Minister: I strongly suspect that Saddam Hussein may yet become a target for his own people. It is perfectly clear that this man is amoral: he takes hostages, attacks population centres and threatens prisoners. He is a man without pity and, whatever his fate may be, I for one will not weep for him.

Mr. Illsley: To ask the Prime Minister if he will list his official enagements for Tuesday 22 January.

The Prime Minister: I refer the hon. Gentleman to the answer that I gave some moments ago.

Mr. Illsley: In view of yesterday's newspaper reports that Department of Health press officers are likely to mislead the country seriously about the ability of the national health service to cope with the Gulf war casualties, will the Prime Minister assure the House that accurate information will be given to ensure that truth does not become one of the first casualties of the war?

The Prime Minister: The hon. Gentleman may certainly have that assurance. There is no question of the national health service or any of its spokesmen, in the Department of Health or elsewhere, misleading either the House or the public.

Mr. Viggers: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer my hon. Friend to the answer that I gave some moments ago.

Mr. Viggers: After much talk of political union in Europe, is not it disappointing that our European allies, given a clear chance of political unity over United Nations resolutions and their imposition, have failed to match their actions to their rhetoric?

The Prime Minister: I entirely understand my hon. Friend's point. There is undoubtedly a considerable disparity in the extent to which individual European countries have committed themselves to the problems of the Gulf. Political union and a common foreign and security policy in Europe would have to go beyond statements and extend to actions. Clearly Europe is not ready for that and we should not be too ambitious when it comes to the intergovernmental conference on political union.

Sir David Steel: Does the Prime Minister agree that, if this morning's reports that Saddam Hussein has started to destroy oil installations in Kuwait are correct, that may suggest two possibilities—first, that Saddam Hussein has given up any chance of holding on to Kuwait and, secondly, that his claim to be defending the interests of Palestinians is manifest nonsense, as 150,000 of them are still trapped in Kuwait, their livelihoods wrecked by his pillage of that country?

The Prime Minister: Saddam Hussein's claim on the latter point is nonsense in any event, whatever may be happening to the oilfields. I am, of course, aware of the media reports of damage to the oilfields and I have made a number of inquiries up to and including the last few minutes to find out the present position. As yet, I have no independent evidence to confirm those reports; I assure the House that, if and when such evidence becomes available later in the day, my right hon. Friend the Secretary of State for Defence will make it public.

Mr. Rathbone: Much has been made of the way in which the Iraqi authorities have broken the Geneva conventions. Will my right hon. Friend now assure the House categorically that British forces, British authority and our allies will stand by both the spirit and the letter of the conventions?

The Prime Minister: I can give my hon. Friend that absolute and complete assurance. It is, I think, an assurance that no one anywhere in the world, even in Iraq, would doubt.

Mr. Rowlands: Given the almost unanimous feeling about the prying press, will the Prime Minister go a little further and make a personal approach to all the major national editors to ensure that they respect people's feelings and wishes?

The Prime Minister: I certainly hope that everyone, including the national editors, will respect the privacy of


people in grief. I hope that that will satisfy the hon. Gentleman, and I am sure that those remarks will have been heard.

Mr. Sumberg: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer my hon. Friend to the answer that I gave some moments ago.

Mr. Sumberg: Does my right hon. Friend recall that, when he visited the Gulf recently, he met troops from the 3rd Battalion of the Royal Regiment of Fusiliers, formerly the Lancashire Fusiliers? That regiment has a strong link with my constituency and recruits extensively in Greater Manchester. Will my right hon. Friend take this opportunity to send a message of thanks and appreciation not just to the troops themselves, but to their families, who anxiously wait at home for news?

The Prime Minister: I am happy to do that. I enjoyed my meeting with them in the desert very much and was able to bring them up to date with Manchester United's results which, in many cases, were in the forefront of their minds.

Mr. Terry Fields: To ask the Prime Minister if he will list his official engagements for Tuesday 22 January.

The Prime Minister: I refer the hon. Gentleman to the answer that I gave some moments ago.

Mr. Fields: Although it is difficult to contemplate the future while we are seeing the horrendous scenes from the Gulf today, while the Prime Minister is contemplating winning the peace will he consider the final arbiters of stability in the Gulf are the Iraqi and Kuwaiti masses? If he accepts that long perspective, how does he think these people will have reacted to the news that tens of thousands of people have been killed, something which seems to contradict the briefing that we have been given that only economic and military targets have been affected?

The Prime Minister: I repeat that I have no confirmation of the figures of casualties that the hon. Gentleman has mentioned. He will know from the debates

here in the past few days the important issues of principle at stake. I think that those issues of principle a re understood both in the House and across the whole world.

Mr. Butterfill: Will my right hon. Friend join me in condemning recent events in Latvia? Does he share my belief that it would be very sad if the Soviet Union were to lurch back into repression? Will he assure the Soviet Union that economic aid from the European Community will depend on the maintenance of civil rights throughout the Soviet Union and its satellite states?

The Prime Minister: I will certainly give my hon. Friend that assurance. I can also tell him that at present we are in regular contact with the elected Baltic leaders. I hope to see the Latvian Foreign Minister, Mr. Jurkans, tomorrow. I understood earlier today that President Gorbunovs of Latvia has had a meeting with President Gorbachev and that he stated at the conclusion of the meeting that he does not expect direct rule to be imposed. I very much hope that that proves to be correct.

Scotland

Mr. McAllion: To ask the Prime Minister when he will next be visiting Scotland.

The Prime Minister: I had a very enjoyable visit to Scotland recently and I look forward to returning there shortly.

Mr. McAllion: The Prime Minister is for ever telling us that he is prepared to listen. If he did so on his recent visit to Scotland, he will know by now that the people of Scotland want the poll tax abolished, they want a Scottish Parliament established in Edinburgh and they want the Tories kicked out of office at Westminster. When will he call a general election to allow them to achieve these three things?

The Prime Minister: How very curious. That is not precisely what they said to me.

Oilfields (Kuwait)

Mr. Speaker: In view of the answer that the Prime Minister has just given covering the application under Standing Order No. 20 of the hon. Member for Linlithgow (Mr. Dalyell), does he wish to proceed?

Mr. Tam Dalyell: Before 9 o'clock, Mr. Speaker, I gave you notice that I wished to raise under Standing Order No. 20, the subject of
the detonation and ignition by Iraq of the oilfields in Kuwait.
In answer to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), the Prime Minister said that he would make information public. May I put it to the Prime Minister—

Hon. Members: No.

Mr. Speaker: Order. The application is to me. The hon. Member is asking for an emergency debate on this matter.

Mr. Dalyell: The matter is definite, urgent and important. Under "definite" I ask that we just see the visual images, that are like Flixborough or Piper Alpha, of the fires in the Kuwaiti oilfields. The truthful answer is that we do not yet know the causes. It depends on oxygen, on the amounts of carbon monoxide, carbon dioxide and sulphur dioxide, and on the problems of photochemical smog, but I argue that this an important matter and that it ought to take precedence over the business later tonight or tomorrow.
What is at issue is the injury to the planet: the soot could make agriculture, both animal husbandry and crop-growing, impossible and could effect the lives of millions of people if, as has been argued on the best scientific grounds, the monsoons were to be altered by this sort of fire.
I put it to you, Mr. Speaker, with the good will that the Prime Minister showed in his answer and with his undertaking, that there would be constant reporting of events in the Gulf, and that, through the usual channels, you give precedence, either later tonight or tomorrow, to the ecological and human results of these disastrous fires. Unless there is a ceasefire, who will put them out?

Mr. Speaker: The hon. Member for Linlithgow (Mr. Dalyell) seeks leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the detonation and ignition by Iraq of oilfields in Kuwait.
I have no doubt that, if what the hon. Member has outlined were to occur, that would be a very serious matter. I have listened carefully to what he has said about it today. I have to say that, in this case, the matter which he has raised does not meet the criteria of Standing Order No. 20, and I therefore cannot submit his application to the House.

Points of Order

Mr. Quentin Davies: On a point of order, Mr. Speaker. I do not know whether you have yet received any representations on your new regulation that hon. Members must wear passes when they are in the House. No one, I am sure, would wish to quibble with any regulation which you might deem necessary for the duration of the emergency, but a number of us have considerable reservations about this as a long-term security measure and believe that it might even be counter-productive. May I, therefore, express the hope that there is no unexpressed intention that the new regulation should be perpetuated after the emergency, and that, if there were such an intention, we would have a full opportunity to debate the matter?

Mr. Speaker: The wearing of passes in the precincts has been introduced, on advice, in connection with the current situation. Any decision to continue the practice indefinitely would be a matter for further consideration.

Mr. Jeremy Corbyn: On a point of order, Mr. Speaker. Have you had any intimation from the Home Secretary of a desire to come to the House to make a statement concerning a substantial number of people of Iraqi and Palestinian background, who have been taken into custody under immigration regulations in the past few days, despite the fact that the Home Secretary gave an undertaking last week that internment would not be introduced? This is an important matter, and I hope that the Home Secretary will come to the House to report on it.

Mr. Speaker: I have had no such intimation. What the hon. Member said will have been heard by the Patronage Secretary on the Front Bench.

Mr. Ron Brown: On a point of order, Mr. Speaker. Can you waive formalities to ensure that a delegation from the Iraqi National Assembly may visit this place? It wants to send members here to meet us. [Interruption.] Even in this period, when we are at war, it makes sense if we speak about peace and about negotiation rather than confrontation. It makes sense to the people outside and to the people that I represent; perhaps it does not make sense on the Government Benches. Clearly something has to be done, hopefully, to resolve the horrible conflict. The National Assembly of Iraq has a political and moral right to send members here to speak to us. [Interruption.] I am willing to listen to them, even if that lot are not.

Mr. Speaker: I am afraid that that is not one of my many responsibilities. I have no power to waive any formalities in that regard.

Mr. Teddy Taylor: On a point of order, Mr. Speaker. Have you noticed from the Order Paper that one and a half hours are permitted for the discussion of motion No. 3, a highly complex matter, and also for motion No. 4, which is equally complex? Can you clarify for the House whether the effect will be that, if we do not complete the discussion of motion No. 3 and its amendments in one and a half hours, there will be no discussion of motion No. 4?

Mr. Speaker: What I can say to the hon. Member relates to points of order. The quicker we get to the Export and Investment Guarantees Bill and complete it—exceptionally, there is not a great demand to take part in that debate—the quicker we can get on to the motions which the hon. Gentleman has mentioned. It will last one and a half hours, or until 11.30 pm if we get to that business before 10 o'clock.

Dr. Norman A. Godman: On a point of order, Mr. Speaker. With reference to the letter which you sent to each of us yesterday—the contents of which I agree with and which I thought were eminently sensible—are you satisfied with the security arrangements concerning the well-being of the staff of the House of Commons, as well as the more vocal Members?

Mr. Speaker: "Satisfied", I think, would be a large claim to make, but I hope that we have taken adequate measures which will ensure the safety of not only the staff but hon. Members.

Mr. Derek Conway: On a point of order, Mr. Speaker. The staff of the Admission Order Office, the Serjeant at Arms and his staff and the Chair are very helpful in enabling those constituents who have travelled far and have waited nine hours, to witness this House live from the side galleries. While we fully understand why those galleries have had to be closed as a result of the demonstration, is that not seen as a way of giving in to the sort of harpies who do that sort of thing?
Those of us who represent innocent visitors, such as the Shropshire Women's Institute, who do not go around throwing paint on hon. Members even if they are peace seekers, think that it is a great sadness that we are giving in to those who behave like that, while the right sort of

visitors, who pay their taxes that we may sit here, are banned from watching us because of the restriction on the number of seats. Can this policy be a very brief one indeed?

Mr. Speaker: I hope the whole House will agree that it is right that we should take what measures seem necessary in order to protect hon. Members in the Chamber. The incident the other day could have been much more serious.

BILL PRESENTED

PUBLIC SERVICE CONTRACT

Mr. David Porter, supported by Mr. Simon Burns, M r. Paul Marlow, Mr. David Martin, Mr. James Cran and M r. Alan Amos, presented a Bill to establish a public service contract, with compensation for failure to supply, between community charge and ratepayers and local authorities, and between consumers and public services: And the same was read the First time; and ordered to he read a Second time on Friday 15 February and to be printed. [Bill 61.]

STATUTORY INSTRUMENTS, &c.

Mr. Speaker: With the leave of the House, I shall put together the three motions relating to statutory instruments.

Ordered,
That the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (England) Order 1991 (S.I., 1991, No. 6) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) Order 1991 (S.I., 1991, No. 20) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (Wales) Order 1991, (S.I. 1991, No. 5) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Chapman.]

Road Traffic (Random Breath Testing)

Mr. Terry Lewis: I beg to move,
That leave be given to bring in a Bill to amend the Road Traffic Act 1972 to provide for additional powers for the police to carry out random breath tests at the road side.
My purpose this afternoon is to highlight the need for further action aimed at deterring the drinking driver, to draw attention to the need for additional police powers to breath-test drivers and to present the case for random breath testing within the prescribed context of a roadside checkpoint.
Public demand for action to reduce drinking and driving has never been greater. A survey by the Harris research centre last March revealed that drinking and driving was among the three offences which people rated as deserving priority attention by the police. That concern is borne out by the facts. Drink-drive deaths are more frequent than deaths arising from violent crime. Around 10 per cent. of all accidents are caused by drinking and driving. The most recent figures show that over 22,000 casualties result from alcohol-related accidents each year, and half of these will not have been drinking drivers but the innocent victims of the selfishness of drinking drivers. At an economic cost to the community of over £600 million, the cost is great. The human cost is impossible to calculate.
As we become increasingly aware of these grim facts and the terrible and unnecessary waste of life, of youth and of childhood our duty to identify and vigorously implement effective counter-measures becomes that much more pressing. While publicity programmes and appropriate penalties have a part to play, there is agreement worldwide that increasing driver perception of the risk of being caught is the real key to any successful programme aimed at reducing alcohol-related accidents.
The most recent figures show that around 500,000 breath tests are conducted each year. Surveys have shown that the chances of detection are quite low, ranging from one in 250 trips in some areas to one in 4,000 trips in others. Drivers' perception of the chances of being caught is also low. A recent study by the Government's transport and road research laboratory showed that 42 per cent. of people who admitted to drinking and driving believed that their chances of being stopped if over the limit were very small. Drivers will only believe the chances of being caught are high if they have evidence that those chances are high. That means being tested themselves, seeing others being tested, or hearing reports from friends or contacts that they have been tested recently. In any event, it means high-profile breath testing activity.
Caution must be exercised in interpreting the mixed results of the Christmas campaign, but it is clear that the police effort is visibly shifting from detection to deterrent. There must be a balance between the two. There is more awareness among the police that the function of the breath test is not merely to detect but to deter drinking and driving. That means more breath tests, fewer positive breath tests and more negative breath tests.
Many people believe that the current debate is not about the principle of carrying out more breath tests or stopping at random but about the best method of

conducting more breath tests to achieve a reduction in road accidents. It is about the best methods of policing the best deterrent effect.
There is widespread opinion that the best way of achieving that is a highly visible police presence at roadside checkpoints, selecting a series of vehicles at random and carrying out breath tests on those passing through. Countries that have introduced that procedure believe that it has been most effective. In New South Wales, Australia, it has brought about a reduction of 35 per cent. in alcohol-related deaths and serious injuries, with cost savings to the health service of 20 times the cost of implementation. It is therefore a cost-effective method.
The police recognise the deterrent effect of those procedures. Mr. Peter Joslin, who is chairman of the traffic committee of the Association of Chief Police Officers, said in a recent address to a road safety conference:
The New South Wales experience had demonstrated that a deterrent based enforcement system was far more effective in reducing drink drive fatalities than was the traditional enforcement model.
Some argue that, more or less, that can be achieved under the present legislation, but it is clear that existing law is not well designed for deterrence. The current powers on random stopping and breath testing, following reasonable cause or suspicion, are more suitable to apprehension than deterrent. If used for high-profile breath testing at a roadside checkpoint, the procedure is a poor man's random breath testing.
Having first stopped a driver at random, the police officer must make up his mind, within the first minute of contact with the driver, whether he can justify requesting a breath test. Immediately there is potential for conflict between the police officer and the driver. That may contribute to a driver's suspicion, however misplaced, that he is being treated differently from the next man. It is a clumsy procedure and, although one or two police forces have proceeded valiantly with that approach, it is questionable whether all police officers would feel confident or comfortable using it widely. If we are to ask the police to do more, let us not ask them to use what many perceive to be a sideways approach.
The Bill does not go as far as providing unfettered discretion for the police to breath-test at any time, anywhere or in any place. It will provide for additional police power to conduct random breath tests at well signposted roadside checkpoints that have been authorised by a senior police officer. That will provide the element of deterrence, which is difficult to achieve under current procedures, and will allow the police to bring about a significant reduction in accidents. I cannot think of a better use of police time. Removal of police discretion will also remove the potential for conflict and ensure that even the most experienced drinker cannot rely on his driving performance to escape detection.
It necessarily follows, therefore, that random screening impinges numerically more on the innocent rather than on the guilty, but as the purpose of screening is to deter the guilty from committing the offence, it functions to safeguard the interests of the innocent majority. The principle is practised everywhere—in security checks in this House and baggage checks at airports. The need for random breath testing is well understood by the public and has received consistently high support. They appreciate that there will be a minor inconvenience.
In the past three years, six surveys of public opinion have resulted in more than 70 per cent. support for the introduction of random breath testing in Britain. Only last November, a poll carried out by NOP for the transport and road research laboratory and a further poll carried out by the Consumers Association, which was published in December, indicated 77 per cent. support. Some 3,000 out of 3,400 responses to the latest Government consultation on breath-testing powers argued for additional powers.
The list of organisations in support of random breath testing is long and impressive. It includes the Association of Police Surgeons, Action on Drinking and Driving, Alcohol Concern, the British Medical Association, the Consumers Association, the County Road Safety Officers Association, the Guild of Experienced Motorists, the National Council for Civil Liberties, the National Federation of Women's Institutes, the Parliamentary Advisory Council for Transport Safety—of which I am a member—and the Royal College of Psychiatrists.
Like the amendments to the Road Traffic Bill which will be discussed soon, my Bill will put deterrent policing on a proper footing. In so doing, it will allow a significant contribution to be made to reducing road accidents and casualties.

Mr. Peter Bottomley: rose—

Mr. Speaker: Does the hon. Member seek to oppose the Bill?

Mr. Bottomley: Yes, Sir. I seek to oppose the Bill. I hope that, having heard my speech, the hon. Member for Worsley (Mr. Lewis) will not push the matter to a Division.
First, we all agree that we are dealing with a serious problem. Every year, 800 to 900 people die because a driver or motor cycle rider drives above the legal limit. That is a serious issue. I shall not draw a comparison with the present conflict in the Gulf, because the position is different there. Deaths on the road caused by alcohol are wholly unnecessary. There is agreement across the House on that issue.
The second question to be addressed is whether countries can learn from each other. The answer is that clearly each can. What happens in New South Wales matters. What happens in Sweden matters. I shall argue that what happens in Britain matters too. My third point is that the test is what works best in this country.
We should re-emphasise what a ghastlly business drink-related crashes are. Only when people understand how terrible such crashes are can they realise that what matters is not necessarily what is popular but what will work and will continue to work. By tradition, I quote the words of Auberon Waugh in The Spectator of 15 February 1986, in an article which affected me when I took over responsibility for a time for cutting road casualties. He wrote:
Every day people lose husbands, wives, parents, children and friends they have loved, whose loss reduces every perspective to dullness, misery and pain. In many cases they carry the pain around with them for the rest of their lives. At moments like this one realises that under the surface of polite society there is a great well of sadness and bereavement, an aspect of the human condition which is as inescapable as it is seldom remarked, yet looming larger in many people's lives than any of the things they pretend to think important.

That was written after the death of his sister. He continued:
The only excuse for allowing my own howl of anguish to be heard is to give those as yet unbereaved a glimpse into the hellish blackness lying under the surface".
Those words help to emphasise that we must consider whether the procedure offered by the hon. Gentleman is likely to be more effective than the present procedure.
I hope that the hon. Gentleman will join me in considering the comparison with New South Wales and the figures that he presented. It is an occasional habit in this country to say that, if something is invented here, it cannot be as good as what we can learn from research overseas. There is a British tradition of saying, "What shall we do?" and then asking, "I wonder whether it will achieve anything?" Instead, people should focus on what we want to achieve and how to do so.
In New South Wales, the proportion of dead drivers above the legal limit in the year before the introduction of random breath testing was 40 per cent. Within two years, with the help of the most enormous publicity campaign and intensive general policing, the figure was reduced from 40 per cent. to 33 per cent. That was a significant and welcome improvement.
The comparative figures for Great Britain from 1982 to 1984—the same years—show that we reduced our proportion of dead drivers above the legal limit from 33 per cent. to 26 per cent.
We have achieved a reduction by the same number of percentage points with no change in the law, no change in sentencing and no change in enforcement. I could argue that changes in the law or in enforcement could make a difference, but the figures show that what was claimed for New South Wales in the years bridging the introduction of random breath testing, happened here anyway.
We want a strategy that continues to reduce the avoidable deaths and anguish caused by drink driving. The figures tend not to be quoted. The figures in New South Wales show that, in 1984, 33 per cent. of dead drivers had alcohol levels above the legal limit, while in 1989, 33 per cent. of the drivers were above the legal limit.
In Great Britain, the figures for the last year a re provisional, the others are not. In 1984, 26 per cent. of our dead drivers were above the legal limit. The figure is now down to 19 per cent. We have had the same degree of improvement since 1984 as New South Wales had when it brought in random breath testing up to 1984.
I cannot use a range of statistics in this debate, because it is too short. Any objective observer commenting on what has worked most effectively would agree that we have seen the greatest improvement here whereas, sadly, in New South Wales, a lower plateau was reached in 1984 and the figure has not changed significantly since then.
The country often quoted when discussing drink driving and random breath testing is Sweden, where 40 per cent. of those caught above the legal limit have no licence. In this country, that figure is 20 per cent. Therefore, the level of habitual drink drivers—those who continue to drink and drive even after they have been disqualified—is running at twice the level in Sweden that it is here. That, together with other evidence—[Interruption.] There is no point in Opposition Members shaking their heads: those are the facts from Sweden.
The figures show that, if we want to find a strategy that reduces drink-driving among those who are most likely to do so heavily, we may do best to continue and increase what we are doing, rather than switch to a different system.
In the past seven years in this country, we have reduced heavy drink-driving by as much as we have reduced the lighter, but still objectionable, drink-driving. Our approach has been working all the way across the board, from the alcoholic, the habitual reoffender who is caught, to those who might be called the sick and social, who are still part of the problem.
I make two recommendations to the House. First, if we were ever to introduce random breath testing, we should not do it in the way suggested by the hon. Member for Worsley (Mr. Lewis)—by telling chief police officers precisely how to do part of their job—

Mr. David Bellotti: The law is confused, and chief constables want to know what they can do.

Mr. Bottomley: The hon. Member for Eastbourne (Mr. Bellotti) says that the police are confused, which shows why we should have a bigger debate rather than simply piling in about what appears to be fashionable.
At present, the police are not using their existing powers consistently across the country. In Merseyside, half the drivers stopped and tested are above the legal limit—clearly, there is not enough testing in Merseyside. We can make the same argument for parts of London. Police chiefs should decide that, unless it is impossible, drivers involved in traffic crashes—they are not accidents, but crashes—especially where injuries are involved, should have their breath or blood alcohol concentrations tested. That would detect and deter more people.
The argument against random breath testing is that it produces only one in four of the people who are caught in New South Wales or Sweden—three out of four are caught in targeted testing. Before people get carried away with the fashion, they should look at the figures, because the reduction in deaths matters more than anything else.
Some people can explain what it is like to receive a phone call in the middle of the night, rush to the hospital not knowing whether loved ones are still alive. They know what it is like to explain a death to younger siblings and children left behind, and what it is like to raise children, nurture them with love and care, and have them taken away before they have lived a full life. Such suffering demands that we do not go for fashion or partial research, but continue what we have been doing in this country—reduce our drink-driving rate to a lower level than in any other country where research has been done.
I ask the House to resist the ten-Minute Bill and join in continuing to tackle this immensely serious problem in ways that will continue to be effective.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 165, Noes 49.

Division No. 42]
[3.59 pm


AYES


Abbott, Ms Diane
Alton, David


Adams, Mrs. Irene (Paisley, N.)
Amos, Alan


Adley, Robert
Anderson, Donald


Allen, Graham
Armstrong, Hilary





Barnes, Harry (Derbyshire NE)
Jones, leuan (Ynys Môn)


Barnes, Mrs Rosie (Greenwich)
Jones, Martyn (Clwyd S W)


Barron, Kevin
Kaufman, Rt Hon Gerald


Battle, John
Kennedy, Charles


Beggs, Roy
Kilfedder, James


Beith, A. J.
Kirkwood, Archy


Bell, Stuart
Lamond, James


Bellotti, David
Lawrence, Ivan


Benn, Rt Hon Tony
Lewis, Terry


Bennett, A. F. (D'nfn &amp; R'dish)
Livingstone, Ken


Benton, Joseph
Lloyd, Tony (Stretford)


Biffen, Rt Hon John
Lofthouse, Geoffrey


Blair, Tony
Loyden, Eddie


Blunkett, David
McAllion, John


Boyes, Roland
McAvoy, Thomas


Caborn, Richard
Macfarlane, Sir Neil


Campbell-Savours, D. N.
McKay, Allen (Barnsley West)


Clark, Dr David (S Shields)
McKelvey, William


Clwyd, Mrs Ann
McMaster, Gordon


Cohen, Harry
McNamara, Kevin


Corbett, Robin
Mahon, Mrs Alice


Corbyn, Jeremy
Marek, Dr John


Cousins, Jim
Marland, Paul


Cryer, Bob
Marshall, David (Shettleston)


Dalyell, Tam
Martin, Michael J. (Springburn)


Darling, Alistair
Martlew, Eric


Davies, Ron (Caerphilly)
Maxton, John


Davis, Terry (B'ham Hodge H'l)
Meyer, Sir Anthony


Day, Stephen
Michael, Alun


Dewar, Donald
Michie, Bill (Sheffield Heeley)


Dixon, Don
Moonie, Dr Lewis


Doran, Frank
Morgan, Rhodri


Douglas, Dick
Morley, Elliot


Dover, Den
Morris, Rt Hon A. (W'shawe)


Dunn, Bob
Mowlam, Marjorie


Dunnachie, Jimmy
Mudd, David


Dun woody, Hon Mrs Gwyneth
Mullin, Chris


Dykes, Hugh
Murphy, Paul


Eadie, Alexander
Oakes, Rt Hon Gordon


Eastham, Ken
O'Neill, Martin


Fatchett, Derek
Pawsey, James


Faulds, Andrew
Pike, Peter L.


Fearn, Ronald
Prescott, John


Fields, Terry (L'pool B G'n)
Primarolo, Dawn


Fisher, Mark
Quin, Ms Joyce


Flynn, Paul
Radice, Giles


Foot, Rt Hon Michael
Redmond, Martin


Forsythe, Clifford (Antrim S)
Rees, Rt Hon Merlyn


Foster, Derek
Richardson, Jo


Foulkes, George
Robertson, George


Fyfe, Maria
Rooker, Jeff


Galloway, George
Rooney, Terence


Garrett, Ted (Wallsend)
Ruddock, Joan


Godman, Dr Norman A.
Salmond, Alex


Golding, Mrs Llin
Sedgemore, Brian


Gordon, Mildred
Sheerman, Barry


Graham, Thomas
Sheldon, Rt Hon Robert


Gregory, Conal
Short, Clare


Griffiths, Nigel (Edinburgh S)
Sillars, Jim


Griffiths, Win (Bridgend)
Smith, Andrew (Oxford E)


Grocott, Bruce
Smith, C. (Isl'ton &amp; F'bury)


Hardy, Peter
Smyth, Rev Martin (Belfast S)


Harman, Ms Harriet
Snape, Peter


Hattersley, Rt Hon Roy
Spearing, Nigel


Haynes, Frank
Steinberg, Gerry


Heal, Mrs Sylvia
Straw, Jack


Henderson, Doug
Taylor, Rt Hon J. D. (S'ford)


Hinchliffe, David
Taylor, Teddy (S'end E)


Hood, Jimmy
Thomas, Dr Dafydd Elis


Hordern, Sir Peter
Thompson, Jack (Wansbeck)


Howells, Geraint
Walley, Joan


Howells, Dr. Kim (Pontypridd)
Wareing, Robert N.


Hoyle, Doug
Welsh, Michael (Doncaster N)


Hughes, John (Coventry NE)
Wigley, Dafydd


Hughes, Simon (Southwark)
Winnick, David


Illsley, Eric
Wise, Mrs Audrey


Ingram, Adam
Wolfson, Mark






Worthington, Tony
Tellers for the Ayes:


Wray, Jimmy
Mr. Ian McCartney and


Young, David (Bolton SE)
Mr. George J. Buckley.


NOES


Alexander, Richard
Hunter, Andrew


Ashton, Joe
Janman, Tim


Beaumont-Dark, Anthony
Lloyd, Sir Ian (Havant)


Blackburn, Dr John G.
Marshall, Jim (Leicester S)


Bonsor, Sir Nicholas
Miller, Sir Hal


Boscawen, Hon Robert
Mitchell, Sir David


Bottomley, Peter
Nelson, Anthony


Campbell, Menzies (Fife NE)
Patchett, Terry


Canavan, Dennis
Pattie, Rt Hon Sir Geoffrey


Carlile, Alex (Mont'g)
Porter, Barry (Wirral S)


Carlisle, John, (Luton N)
Porter, David (Waveney)


Clark, Rt Hon Sir W. (Croydon S)
Ridley, Rt Hon Nicholas



Skinner, Dennis


Colvin, Michael
Smith, Sir Dudley (Warwick)


Conway, Derek
Speed, Keith


Coombs, Anthony (Wyre F'rest)
Steen, Anthony


Crowther, Stan
Summerson, Hugo


Dickens, Geoffrey
Waller, Gary


Ewing, Harry (Falkirk E)
Wells, Bowen


French, Douglas
Wheeler, Sir John


Fry, Peter
Whitney, Ray


Gale, Roger
Wilkinson, John


Gardiner, Sir George



Glyn, Dr Sir Alan
Tellers for the Noes:


Greenway, Harry (Ealing N)
Mr. Colin Shepherd and


Grylls, Michael
Mr. Peter Thurnham.


Higgins, Rt Hon Terence L.

Question accordingly agreed to.

Bill ordered to be brought in by Mr. Don Dixon, Mr. Allen McKay, Mr. Stephen Day, Sir Hugh Rossi, Mr. Roland Boyes, Mr. Bob Cryer, Mr. Michael Martin, Mr. Ronnie Fearn, Mr. Ian McCartney, Mr. Simon Hughes, Mr. David Bellotti and Mr. Terry Lewis.

ROAD TRAFFIC (RANDOM BREATH TESTING)

Mr. Terry Lewis accordingly presented a Bill to provide for additional powers for the police to carry out random breath tests at the roadside; And the same was read the First time; and ordered to be read a Second time upon Friday 1 February and to be printed. [Bill 62.]

Mr. Chris Mullin: On a point of order, Mr. Speaker. I have just come from Her Majesty's prison, Pentonville, where a constituent of mine is one of about 70 Iraqis held in conditions far worse than those in which Saddam Hussein held his hostages. He has lived in this country for nearly 10 years. He was picked up without any notice and brought to the prison in handcuffs. He is a respectable business man, who has never been involved in any political activity of any kind. He and about 70 other people are now languishing in Pentonville prison awaiting deportation to Iraq, where many of them face perhaps death.
As I cannot get any sense out of the Home Office on this subject, Mr. Speaker, I wonder whether you could use your influence with the Secretary of State for the Home Department to ask him to come to the House to make a statement. Perhaps you could remind him that we are supposed to be fighting a police state, not behaving as though we are one.

Mr. Speaker: This patently is not a matter for me. The hon. Member has made his point, and I am sure that what he has said will have been heard by those on the Front Bench.

Orders of the Day — Export and Investment Guarantees Bill

Order for Second Reading read.

The Minister for Trade (Mr. Tim Sainsbury): I beg to move, That the Bill be now read a Second time.
This Bill has two main purposes. The first is to update the legislation that enables the Government to provide, through the Export Credits Guarantee Department, export credit and investment insurance. The second purpose is to bring about the privatisation of the insurance services business of the ECGD.
Before I describe how the Bill achieves these two purposes, I should like to explain the background to this legislation. For over 70 years the ECGD has been protecting United Kingdom exporters against the financial risks of selling abroad. During that time, it has supported over £250 billion of British exports. It has operated as a separate Government department reporting to the Secretary of State for Trade and Industry. It has insured the whole spectrum of exports, from raw materials sold on cash terms to process plant for which the financial risk in some cases can spread over decades. The ECGD's operations naturally break down into two separate businesses. These have two quite distinct characteristics, which are reflected in ECGD's organisation and management.
The insurance services group, which is based in Cardiff, handles exports sold on short-term credit. The project group, which is in London, handles capital goods exports sold on medium and long credit terms. Those groups are increasingly run as separate businesses, although their financial results are combined in the publication trading accounts of the ECGD.

Mr. D. N. Campbell-Savours: Can I ask the Minister what may be a difficult question for him to answer on that second group of capital goods? I understand there are reports today that British construction companies were involved in the design and, in some cases, the construction of underground reinforced concrete aircraft hangars in parts of northern Iraq. I do not know whether that information was made available to Her Majesty's Government or whether those contracts had ECGD cover. Were those projects covered by export credit guarantees? In so far as I understand that the Treasury is required to approve such arrangements where they are made, was the Treasury involved, and did the Minister of Defence make any representations to the Department of Trade and Industry in so far as it also has a role?

Mr. Sainsbury: The hon. Gentleman referred to contracts, but his remarks were vague. He did not specify any particular contract. I suspect that he will be aware that the Government, and indeed all previous Governments, have sound commercial and political reasons for riot revealing details of individual transactions with individual exporters. That would be a breach of commercial confidence. If the hon. Gentleman wants to raise specific matters with me, perhaps he will write to me.

Mr. Campbell-Savours: Details have been transmitted—

Mr. Sainsbury: I am sorry, but I must get on.

Mr. Campbell-Savours: On a point of order, Mr. Speaker.

Mr. Speaker: Order. The hon. Gentleman may not have got the answer that he wanted, but it is not a point of order for me.

Mr. Campbell-Savours: On a point of order, Mr. Speaker. The Minister has asked me to provide information which is already in the public domain. It has been transmitted on British television today to the homes of millions of people. The individual plants have been named and journalists have had discussions with people in the Departments concerned, and that information should be dealt with in Westminster.

Mr. Speaker: That is not a point of order. The hon. Gentleman can make such points if he catches my eye later.

Mr. Sainsbury: In August 1988 my noble Friend Lord Young, then Secretary of State for Trade and Industry, agreed to a review of the ECGD. That review was to identify whether any changes were needed to enable the ECGD to serve better the needs of United Kingdom exporters, particularly after 1992 and the completion of the single market. My noble Friend was particularly concerned to establish whether the existing structure of the ECGD, which has served exporters so well over many years, would remain appropriate in the future, especially after the completion of the single market.
For the insurance services group, the major change is the increasing concentration of its business on exports within the EC and the growing competition between European insurers for that sector of the business. Those trends are certain to continue. There is also the threat to the insurance services group of a possible legal challenge to its EC and OECD business on the basis of its being a state aid incompatible with articles 92 and 93 of the treaty of Rome.
For project business, the pressures are altogether different. There the trading environment has been dramatically changed by the world debt crisis and its aftermath. That has put the ECGD's trading accounts into substantial deficit and it has reduced significantly the level of new business opportunities in comparison with the early 1980s. For those opportunities that arise in the less risky markets, competition between British and foreign exporters is fiercer than ever.
It was against that background that a review was published which has subsequently been known as the Kemp review. It concluded that the interests of British exporters were not best served by leaving the ECGD unchanged. Its principal recommendations were that the insurance services business should be separated from ECGD and converted into a Government-owned company with a view to eventual privatisation. The review also concluded that the remainder of ECGD's activities should continue to be provided by Government through the ECGD, which would remain a separate Government department.
Furthermore, the review recommended that a reinsurance link should exist between the private insurance

services company and the ECGD. This would allow the new company to place certain risks with the ECGD which could not be reinsured on the private market.
The House will also recall that, at the same time as Ministers were considering the review, the Select Committee on Trade and Industry conducted a short inquiry into the future of the ECGD. The Select Committee invited evidence from a wide range of outside bodies—exporters, trade associations, bankers and brokers. The vast majority of the memoranda submitted to the Committee supported the recommendations in the review and the need for ECGD to continue as a Government Department to support capital goods exports sold on long and medium-term export credit was particularly stressed. It was also accepted that the ECGD needed to be restructured if it were to compete in the single market. A large majority of the memoranda submitted to the Select Committee supported the privatisation of the insurance services business.

Ms. Joyce Quin: Will the Minister tell us how many people supported the idea of immediate privatisation without waiting for the four to five-year period recommended by Mr. Kemp?

Mr. Sainsbury: At that time, immediate privatisation was not being considered. It was not an issue that was put to those who were submitting memoranda to the Select Committee.

Mr. Michael Grylls: I am sure that the House will welcome this privatisation. Will my right hon. Friend assure the House about the effect of privatisation on the needs of the small and medium businesses, 70 per cent. of which do not export? Many of these companies could export if they had a more flexible form of credit insurance. Will he assure the House that one of the results will be greater flexibility to help those firms to enter the export market in the national interest?

Mr. Sainsbury: My hon. Friend makes an important point. We would like to see even more smaller businesses engaging in exporting. In practice, it is the smaller exporters who probably find the greatest advantage in having one organisation able to provide insurance on their sales, not only to the export but also to the domestic market. I shall come to this point again later.

Dr. Keith Hampson: Since I was a member of the Select Committee on Trade and Industry, could I inform the House that Rolls-Royce in particular told us that the faster we got moving the better?

Mr. Sainsbury: I am very grateful for that information from my hon. Friend, who is a member of the Committee.
I return to my theme of setting the scene for the provisions of the Bill. My right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who was then the Secretary of State for Trade and Industry, announced on 18 December 1989 that the Government broadly accepted the Kemp review recommendations. It was decided to introduce legislation that changed the status of insurance services in Government-owned companies. Private capital would then be injected into the company as soon as practicable. In accordance with normal insurance practice, my right hon. Friend noted that the company would need to secure reinsurance in the


private market, but accepted the possible need for the Government itself to make available reinsurance for certain risks for a transitional period of up to three years.
The Government believe that this change in the status of the insurance services group is essential, but we stress that the recommendation for change came from the review and it has the strong endorsement of exporters. The insurance services group is based in Cardiff and has nine regional offices throughout the United Kingdom. The group handles a lot of repeat business. The great majority of the exports it covers are handled on cash or short-term credit of up to a maximum of 180 days.
Since the insurance services group moved to Cardiff in 1976, it has played an important role in expanding the financial services market in south Wales and has wisely used the wealth of talent in that area. There has been major investment in new technology, which last year resulted in more than 70 per cent. of the 180,000 applications for insurance cover received being processed within 24 hours of receipt. That compares with only 18 per cent. four years earlier. That improvement greatly helped the competitiveness of exporters of all sizes.
Buyer information is essential to good underwriting, and further improvements have been made in obtaining it, with ECGD taking the lead in initiating exchanges of information with other credit insurers. I am sure that no exporter who has had a policy with ECGD will have failed to notice the successful efforts that have been made to improve customer service. We now need to safeguard that service, so that it can compete in the post-1992 market, and hence the Bill. Without the changes for which it provides, the present service to exporters would be at risk.
Until recently, the insurance services group enjoyed a virtual monopoly.

Dr. Michael Clark: I am fully aware that my hon. Friend wants to privatise the insurance services group in Cardiff and to bring about competition. However, if the only bidder for the Cardiff-based group is Trade Indemnity, which is ECGD's competitor, does my hon. Friend not agree that it would be better to keep the group in state ownership, because competition between a state and a private insurer would be better than a privately owned monopoly in that sector?

Mr. Sainsbury: I will refer shortly to the process of sale and to the point that my hon. Friend raises.
The need to put the group into the private sector is not associated just with competition but with the change in the trading environment consequent upon the completion of the single market in 1992 and the threat of legal challenge to the group operating as a Government aid, in breach of the treaty of Rome.
The Government have insisted that the insurance services group should be run as a business and not as a subsidy for exporters. In any event, a subsidised service would be in breach of the treaty of Rome. Competition is welcome, but it is essential, if the business is to flourish, that the group does not find itself competing with one hand tied behind its back. The creation of a single market means that exporters and their insurers more and more regard the Community as an enlarged domestic market, and the distinction between domestic and export credit insurance is becoming blurred.
Many private insurers are offering, and companies are taking, credit insurance policies covering both domestic

and export trade, which is both administratively convenient and cost-effective, particularly for smaller businesses. If Cardiff is unable to offer a competitive product, it risks losing its best business.
The insurance services group is prevented by statute from offering a truly competitive product. The Government would naturally not want to legislate to widen the Secretary of State's powers to enable him, via the ECGD, to operate domestic credit insurance in competition with existing private sector insurers. If the group is to compete effectively in the market, it must be as a private sector insurance operation.
Those compelling reasons for moving the Cardiff-based company into the private sector are reinforced by the legal threat to which I referred, which hangs over all European state-owned export credit insurance agencies. The financial backing that a national agency such as the ECG D receives from its Government could be regarded under article 92 of the treaty of Rome as state aid, which is prohibited. Almost every EC member state is working on the assumption that state-financed insurance services may be prohibited. Therefore, like us, many find themselves reorganising their official export credit insurance structure to cut out state control. The United Kingdom must take account of that, and I suggest that the Opposition also take account of it.
The danger is that, if ECGD's insurance services are excluded from EC and OECD business by such a ruling, it would remove about 75 per cent. of better risk business at a stroke, and without such business, the insurance services group's remaining risk portfolio would not be viable. It would also be chaotic for businesses to seek export insurances from one organisation for exports to the EC and OECD and from another for exports to the remaining areas of the world. An outcome along those lines must be avoided—it is against the interests of the ECGD, its customers, staff and the taxpayer.
Clearly, the status of the insurance services group must be changed to meet those legal and business challenges, but also to meet the huge opportunities which await it. Not only is Insurance Services a market leader in the United Kingdom: it is well placed to build up business in other countries. It will only be able to do so after the proposed changes. Then it will be able to provide the cross-border services enshrined in the EC insurance directive, although ultimately that will be a matter for the owners of Insurance Services. The chance exists for the company to develop into a major force in the European Community, bringing substantial benefits to the United Kingdom and to the South Wales economy.
Before turning to the details of the Bill, I should like to mention two matters about which there have been some comments and misunderstanding. It has been said that the Government will not continue to provide insurance for those risks that the private insurance industry is unwilling to take. I am glad to be able to tell the House that that is not the case.
The Government intend to transfer as much of the risk as possible to the private sector. We are confident that the vast bulk of the risk will be insured, or reinsured, in the private insurance market immediately upon privatisation. However, there are a few countries in which ECGD facilities are currently available but where adequate private market capacity does not exist at present. To avoid a sudden and sharp reduction in the facilities available to British exporters in the immediate aftermath of


privatisation, some support will be available from ECGD to enable the company to maintain facilities in those markets, and those arrangements will be kept under close review.

Mr. Alex Carlile: It is reassuring to know that facilities will continue to be available, because they will be much needed in some difficult areas. Can the Minister tell the House how long he envisages that they will remain available, as that question is in the forefront of the concerns of many companies?

Mr. Sainsbury: As I have said, we shall keep those arrangements under close review. As the hon. and learned Gentleman will appreciate, I am sure, the markets to which I refer change. A market may be acceptable to the private sector, but political events may change its marketability, and different arrangements need to be adhered to. That needs to be kept under review. It is a changing situation, and we shall keep it under review.
The second misunderstanding that I wish to clear up relates to project exports, which ECGD will continue to cover. In recent years, ECGD support for project exports has proved an expensive business for the taxpayer, largely due to the effects of the debt crisis, which has plunged ECGD's accounts into substantial deficit, after many years of operating at a healthy surplus. It will take many more years before we can say with certainty what the cost has been.
As an illustration, ECGD's last published accounts showed a cumulative deficit of £693 million and referred to the possible need to add £3 billion to that figure, to make further loss provisions on sovereign debt. Those are enormous amounts by any standards, and the annual cost of interest rate subsidies, incurred to allow exporters to quote the internationally agreed minimum interest rates, must be added to them, which costs about £400 million at present.

Mr. Kenneth Hind: Will my hon. Friend be following the European Community rules from now on, and will the project group not provide any form of assistance to industry within the EEC? Does he agree that that would help to release assistance for projects in other parts of the world, where it is clearly more needed, especially third-world countries in, for instance, south and central America?

Mr. Sainsbury: As my hon. Friend may know, in practice the project group's business is almost entirely in the developing world. The European Community market —and, indeed, the market in OECD countries—is either not one that British exporters of project business have been successful in penetrating, or a cash market rather than one in which ECGD cover is called for.
Despite the cost to which I have referred, the Government remain committed to supporting this important sector of our industry. Nevertheless, it would be a dereliction of our duty to the taxpayer, and to the rest of the economy, not to take any action aimed at preventing a repreat of this experience in a few years' time. What was needed, therefore, was a decision-making framework that would better enable us to balance the national-interest case

for supporting project exports with the financial risk to the taxpayer. The ECGD has been working on the so-called portfolio management system to meet that need.
I recognise that, while the ECGD has been doing that work, there has been some uncertainty about the cost and availability of future ECGD support; but the announcement made on 14 January by my right hon. Friend the Secretary of State has ended that uncertainty, and exporters have welcomed that announcement. It guarantees insurance cover for desirable project exports—those that we are reasonably confident will be paid for—but within a pricing and risk-control structure that protects the taxpayer's interest. I confirm the Government's commitment to provide a stable and viable framework of ECGD support for project exports.
Part I of the Bill relates to the powers that are being sought for the continuing ECGD. Its main purpose will continue, as its name implies, to be the provision of guarantees in support of British exports and overseas investment. The Export Guarantees and Overseas Investment Act 1978, which is the statutory basis for those functions, has begun to show its age, and that is especially marked in the way in which the Act prevents the ECGD from taking full advantage of the latest techniques and instruments available in the financial markets. That means that it cannot manage the assets and liabilities that it has acquired in the normal course of business as well as it would like. For example, the ECGD often wishes to adopt innovative financial techniques to help minimise loss or reduce costs, only to find its hands tied by out-of-date law.
Of course, those needs could not have been anticipated in 1978, so it is perhaps not surprising that the existing Act relies too much on the Secretary of State's inherent and implicit, rather than explicit, powers. That has on occasion given rise to uncertainty about the ECGD's authority, and has limited its field of activity.
For those reasons, part I adopts a completely fresh approach to describing the powers of the continuing ECGD. The existing Act is to be repealed, as parts I and III are a complete replacement for the old powers. Let me emphasise again, however, that that implies no fundamental change of any kind in the role of the ECGD. Its primary function will remain the encouragement of exports and overseas investment through the provision of insurance against credit risks. It will remain subject to the objective for its trading facilities to operate over time at no net cost to the Exchequer, and the new powers should enable it to do its job better.

Mr. Gerald Howarth: As my hon. Friend knows, the existing arrangements provide so-called section 2 cover. When the ECGD is up against its country limits and therefore will not insure a project, the matter can nevertheless be referred to the Export Guarantees Committee, where what is essentially a political decision will be made to provide cover—although the country is up to its limit, and repayment may be a more dubious prospect than it is in the case of other countries. Will that provision continue, or do the Government propose to deal with such cases in a more hard-nosed and commercial fashion?

Mr. Sainsbury: Broadly the same procedures will apply, but we believe that what is proposed and is now being introduced under the portfolio management system will


provide a more viable and practical framework to balance the mutual objectives of helping the exporter and having proper regard to the interests of the tax payer.
Clause 1 retains the existing but rarely used powers for rendering economic assistance overseas, powers which have lain dormant since the creation of the Overseas Development Administration, except for the restructuring of sovereign debt. There is no current intention to use the powers for any new purpose, and I repeat previous ministerial assurances that this would not be done without a prior statement to the House.
Clause 2 enables ECGD to continue to give guarantees on investments made in overseas enterprises. An additional power is introduced to extend cover in relation to associated companies, and this will broaden the scheme's appeal to potential investors. It is a minor example of the need for this legislation.
Clause 3 allows the ECGD to enter into whatever arrangements may seem appropriate for the proper financial management of its portfolio, and this will permit ECGD to benefit from greater use of financial market techniques such as bond issues, interest rate and currency swaps. This will better control and possibly reduce costs to public expenditure.
It will be noted that the statutory distinction between guarantees issued in the national interest and other "commercial" guarantees is not retained. It has become a less relevant distinction, and it will become even less relevant when ECGD's business is centred, after the insurance services changes, on medium—and long-term export credits. This has implications for the Export Guarantees Advisory Council, whose current role is to advise ECGD on the "commercial" risks—

Mr. Ron Davies: On a point of order, Mr. Deputy Speaker. I do not wish to interrupt the Minister, but you will recall that, just a few moments ago, the hon. Member for Cannock and Burntwood (Mr. Howarth), on an intervention, asked some questions of the Minister. May I draw your attention to the Register of Members' Interests, published in January 1990, which among other entries records that the hon. Gentleman is parliamentary consultant to Trade Indemnity plc, which is likely to be the purchaser of ECGD if the privatisation goes ahead?
I do not wish to cast any aspersions at all on the hon. Gentleman, because he has in the past made his own position quite clear. I just wonder if it would not be more proper in these matters, even if Members are intervening rather than making speeches, for them to take every opportunity to declare a personal interest.
Will you not give the opportunity to the hon. Gentleman to put on the record the fact that he is a parliamentary consultant to Trade Indemnity?

Mr. Gerald Howarth: Further to that point of order, Mr. Deputy Speaker. It is outrageous of the hon. Member for Caerphilly (Mr. Davies). He knows perfectly well that I have the honour to be parliamentary consultant to Trade Indemnity. The hon. Gentleman also knows that I happen to be a practitioner in this matter. If those of us who are in the House are going to be unable to participate in debates in the House on matters which are of great concern to our constituents and throughout the country, it is unfair. I have been accused by the hon. Member. The point that I raised with my hon. Friend had nothing to do with

whether I have a consultancy or not but everything to do with the measure that my hon. Friend is bringing before the House.

Mr. Deputy Speaker (Mr. Harrold Walker): Order. The hon. Gentleman is now getting dangerously near seeking to debate the whole question whether hon. Members should declare their interests or not when they intervene in debates.
There is an obligation, according to "Erskine May", that hon. Members participating in debate should declare their interest. However, it has not been the practice in recent years to require an hon. Member in the course of asking a question or intervening to make formal declaration of an interest which is recorded in the Register. It will be usual and expected that an hon. Member having a direct pecuniary interest in a matter before the House declares that interest in the event of making a speech in debate.
very much hope that that will enable us to get on.

Mr. Ron Davies: Further to that point of order, Mr. Deputy Speaker. I should like to make it clear that I did not make an attack on the hon. Member for Cannock and Burntwood. He appears to be sensitive about these matters, and I am sure that he is well rewarded for his sensitivity. I do not want to criticise him, because he has made it abundantly clear in the past that he has a direct financial involvement.
The point that I was trying to make was whether in these circumstances, where we are discussing the transfer of public assets to what is likely to be one private monopoly, and where the hon. Gentleman has such a close relationship, it would not be proper to interpret the ruling that you quite rightly gave in its broadest sense and require the hon. Gentleman and others who might have direct financial involvement to take the opportunity, even though on an intervention, to make that declaration of interest. Could you, Mr. Deputy Speaker, perhaps reconsider your ruling with a view to broadening its scope so as to require hon. Members in these circumstances to make that declaration of interest, even though they are only making an intervention?

Mr. Deputy Speaker: It would be most unwise of me to go beyond what I have said. I very much hope that right hon. and hon. Members will bear in mind what has been said in the course of this exchange.

Mr. Gerald Howarth: Further to that point, Mr. Deputy Speaker. So that the House will not be misled, I am most grateful to the hon. Member for Caerphilly for his kindness and courtesy—what he is like when he attacks people, I do not know. I am most grateful for his felicitations. Just for the avoidance of doubt, I hope to be able to catch your eye, Mr. Deputy Speaker—which is why I shall sit down very quickly now—later on in the debate. It is at that point that I had intended at some length to develop a full explanation to the House of my interest in these matters, which I hope might be for the benefit of the House rather than to its detriment.

Mr. Sainsbury: The hon. Member for Caerphilly may be interested to know that my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) had had the courtesy to tell me that he hoped to try to catch your eye during the debate, Mr. Deputy Speaker, and that he intended to declare his interest if he were called—


[Interruption.] The hon. Member for Caerphilly said that he did not want to interrupt the Minister. I do not know what he does when he wants to interrupt the Minister, because he has certainly succeeded in making a lengthy interruption.
Returning to the implications for the Export Guarantees Advisory Council, whose current role is to advise ECGD on the commercial risks underwritten under section I of the existing Act, the advisory council consists of eminent bankers and industrialists, and I am pleased to take this opportunity to thank the chairman, Mr. Peter Leslie, and the council members for all the time and valuable advice that they have freely given to ECGD. The major challenges facing ECGD mean that their expertise is needed more than ever; consequently, the Bill extends the advisory council's role so that ECGD can seek its guidance on any matters relating to ECGD's powers, duties and functions.
These changes in ECGD's basic powers do not, however, mean that there is to be any change in ECGD's practice, which stems from the statement by the noble Lord, Lord Wilson of Rievaulx, then President of the Board of Trade, that it will not issue guarantees for "unduly hazardous or quite crazy" risks. In any circumstances where ECGD's accounting officer judges risks to fall into this category and is instructed by Ministers to cover them, then, as has been past practice, an announcement will be made to the House.
I should also stress that the change does not mean that the Government's commitment to project exports is in any way reduced.

Mr. Steve Norris: Will my hon. Friend the Minister just consider what, at least in my submission, is an important component of the examination of any risk that the Government propose to subsidise at the taxpayer's expense—the profitability of the manufacture for the company concerned? Surely, in an examination of the likely return to the community as a whole, it is important not to put ourselves in the situation where the net effect of our subsidy is to hand over a substantial amount of British taxpayers' cash to some foreign country.

Mr. Sainsbury: My hon. Friend the Member for Epping Forest (Mr. Norris) raises an interesting point. The objective of ECGD is to try to determine whether the buyer will pay for what he is purchasing, whether it is a sovereign buyer or an individual company. It would be requiring rather a lot of ECGD or any other credit insurance agency to expect it to try to make judgments on the pricing structure of the vendor.

Mr. Peter Thurnham: My hon. Friend said earlier that the intention was that these services should be provided at no cost over time. Does that imply that previous losses have to be recouped over a period?

Mr. Sainsbury: We would hope that what are now shown as losses would substantially be recovered over time, through rescheduling particularly. I am not suggesting that future business should acquire a profit sufficient to repay the losses which have been accummulated and which stand in the books, but we hope that

in due course they will be recovered through those who have failed to pay meeting their payments later, usually through the Paris Club rescheduling.

Several Hon. Members: rose—

Mr. Sainsbury: I should like to move on, as I have been generous in giving way, and we have had points of order as well.
Clause 5 will permit ECGD to encourage exports and at the same time improve its financial outturn by marketing some of the information and skills which it acquires in its business activities. Clause 6 places limits on the level of commitments which may be assumed in respect of the operations covered by clauses 1 to 3 of the Bill.
At present, the sterling statutory limit is set at £35 billion and no change is proposed. The foreign currency limit currently stands at 25 billion special drawing rights, but as commitments under this limit do not exceed 6 billion SDR at present, it is proposed to reduce this statutory limit to 15 billion.
Clause 7 provides for a return to be laid before Parliament giving details of the Department's sterling and foreign currency commitments as soon as practicable after 31 March in each year. ECGD also wishes to be in a position to take advantage of ecus as a financing medium and such other units of account as may be created from time to time, and provision for this has been included in clause 6, which I am sure will be welcome to hon. Members in all parts of the House.
Part II of the Bill relates to the proposed privatisation of the insurance services business. It provides the necessary legal framework to implement the Government's intentions. It will allow the Secretary of State to prepare a scheme for the transfer of any property, rights and liabilities currently vested in ECGD's insurance services business. This is dealt with in clause 8.
Clause 9 provides for the arrangements for the transfer of staff to the Government-owned company. These arrangements adopt the practice of earlier privatisations by ensuring that the terms and conditions of service of employees do not suffer as a result of their transfer. In this regard, the Transfer of Undertakings (Protection of Employment) Regulations 1981, commonly known as TUPE, will apply and will protect the position of staff.
While TUPE provides some basic but none the less important legal safeguards, it does not apply to all elements of the employment package which civil servants enjoy at present. First, TUPE does not apply to pension schemes. The Government nevertheless wish to ensure that the staff of insurance services who transfer to the private sector will enjoy pension arrangements in conjunction with terms and conditions of employment which are overall broadly comparable to the civil service terms and conditions which they currently enjoy.
Anything which failed to achieve this could prejudice the prospects for effecting a voluntary staff transfer. This would, in turn, endanger the success of the whole privatisation, given the vital importance to the business of the expertise and commitment of its staff. For that reason, in judging the bids they receive, the Government will ensure that any proposed employment package on offer reflects this need.
Secondly, there is a point about the arrangements for redundancy compensation for civil servants. These redundancy rights are currently enshrined in the civil


service pension scheme. As I have said, pension schemes are not transferred under TUPE. It will clearly be important that the transferring staff do not lose the rights which they have built up in the civil service. It is therefore intended that arrangements will be made which will ensure that the existing entitlements of these staff to redundancy compensation remain with them in their private sector employment.
Clause 10 provides the means for the Secretary of State to acquire or be issued with shares in a vehicle company for the purpose of converting it to a Government-owned company. So as to avoid unnecessary uncertainty, it is planned that the sale of the Government-owned company to the private sector will take place as soon as practicable after it has been set up. Clause 11 enables the Secretary of State to take reinsurance from the company into which the other assets and liabilities of the insurance services business have been transferred.
Clause 12 confers the power to delegate to the new company or any other body the functions described in clause 1. This is primarily intended to permit the new company to undertake an agency role on behalf of ECGD in respect of any business where ECGD remains the principal in the transaction, but wishes, for reasons of administrative convenience, to delegate the administration to the new company.
I should at this point like to say a few words about the proposed method of sale of the insurance services business to which reference has been made. The Government have already announced that this will be by means of a trade sale rather than a public flotation. This is because of the particular character of the insurance services business—a highly specialised, risk-taking enterprise which has yet to operate as a fully independent entity. A trade sale offers the best prospect of securing a purchaser who will understand, and be committed to, this complex business and bring to it strong financial resources. This is obviously the right solution for our exporters.
There is also every reason to believe that a competition between interested trade purchasers will achieve good value for money for the taxpayer. Responses to a pre-qualification questionnaire issued by the Government's financial advisers have been received from a wide range of institutions. As soon as convenient after Second Reading, and after taking account of the points made by hon. Members in the debate, a short list of bidders will be selected from the respondents to the questionnaire, and they will be invited to submit definitive bids.
However, while price will be an important factor, it will not be the only one. At the end of the day, the Secretary of State reserves the right to reject any bid which in his view is unsatisfactory, after taking all relevant factors into account. I will ensure that the names of the short-listed bidders are published and that other relevant information will be made available in the Library of the House. As hon. Members will be aware, the Kemp review itself' and ECGD's annual report and accounts are also placed in the Library.
I am sure that the whole House will realise that the changes we are proposing add up to the most radical and comprehensive review of ECGD since its establishment over 70 years ago. In making these changes, the Government's sole aim has been to ensure that the vital

services provided by ECGD to exporters are safeguarded for the future. It means that ECGD will now continue as two separate organisations.
However, ECGD has never shirked the need for change. I am confident that both organisations will continue to provide first-class support for our exporters. Insurance Services, as a company, will be able to provide a still better and even more up-to-date service to British industry than it could as part of a Government department. The purpose of the Bill is to ensure that a first-class standard of export insurance continues to be available to British exporters. I commend it to the House.

Ms. Joyce Quin: We have become used to seeing the Government introduce privatisation measures amid confusion and incompetence. The latest measure is a striking example. We are presented with a Bill which seems to be privatisation for privatisation's sake. It is difficult to see any other justification for it. It is clear that what is proposed in the legislation will be harmful to British exports and to the economy as a whole.
The Bill has already given rise to a storm of protest by those affected. Even by the Government's standards, it seems singularly ill thought out. It is likely to be harmful not only to exporters who rely on the short-term cover provided by the insurance services group of ECGD, which the Government propose to privatise, but also to those who rely on the long-term cover provided by the project division. The Bill includes clauses dealing with both parts of ECGD and both, I believe, will be badly affected by it.

Mr. Hind: The hon. Lady has been making a point about the reasoning behind the Bill. Surely there is a fundamental reason why we should examine the problem. It is likely after 1992 that under article 92 state support will be ruled out by the Commission. Clearly it is state support contrary to the competition rules. If that is so, the British exporter will be at major disadvantage, facing a state-run support system which in effect will be illegal under Community law.

Ms. Quin: There are two responses to the hon. Gentleman's intervention. The first is that there is no immediate pressure from the European Commission to take action of the kind that the Government are proposing. The second—if the hon. Gentleman will do me the courtesy of listening—is that other state credit insurers within the EC do not seem to be acting in the same way as the Government in this respect. So there are clear differences. Because of that, we need to look at this much more closely rather than simply saying that, because 1992 is coming along, we automatically have to change the status of ECGD.

Mr. Sainsbury: The hon. Lady seems to think that there is something wrong in the Government's taking action in good time. What would she say if we left it until the last moment and had to do things in a rush? Could I also draw her attention to the action being taken by the Danish Government in respect of its own export credit organisation? She should be aware that this is a real threat to which other European countries are having regard, and we would be falling short of our duty to exporters if we ignored it.

Ms. Quin: It is not really a question of taking action in good time; it is a question of taking action which will mean that the so-called playing field in Europe is very uneven indeed with regard to export support. We are worried by the fact that the Government are, in effect, cutting back on this kind of export service at at time when other European countries, including our major competitors in France and Germany, are not doing so. I shall return to the point about the level playing field later in my comments.

Mr. Doug Hoyle: We have heard the Minister, and we have heard the hon. Member for Lancashire, West (Mr. Hind) from the Conservative Back Bench, but that is not what Kemp found in his report. He said this:
there is nothing in the existing package of 1992 legislation nor in any other proposals for legislation that have been tabled or are known to be under consideration, which in any way affects the ability of the state agencies to carry on business as they have been doing.
I think it is a red herring—or a blue herring—from the Conservative Benches.

Ms. Quin: I am grateful to my hon. Friend. Although the Kemp report dates from some time ago, the position as outlined by my hon. Friend remains substantially the same.
I stress that this measure comes at a time when support for exports in Britain is particularly important. We had a huge trade deficit in 1990—probably about £16 billion—following the staggering deficit of more than £19 billion in 1989. These are deficits of a magnitude previously unknown in our country. We run a huge deficit with West Germany and also with Japan, and we have the difficulty of competing with those countries in third-country markets. The average annual growth rate in the volume of our exports in the period 1979–89 was only 3·5 per cent. It was lower than that of any EEC country, Japan or the United States.
The need to export has never been greater than it is now. As one newspaper headline put it just a couple of weeks ago,
As never before, it's export or die.
Yet the Government's response to the need to export more has been to cut the services available to our exporters. The Government have introduced charges for export services, there have been cuts in support for exporters exhibiting at trade fairs, for example, and there have also been failures to help exporters in particular cases. One case which recently came to my attention, and about which I have written to the Minister's colleagues, concerned the Government's role in helping to lose a valuable order for six ships from Appledore Shipbuilders, in Devon, because the Government refused to act as guarantor in the way that the customer had come to expect from other Governments.
The point should be made also that the current general economic climate in Britain is not helpful to exporters, so this is a particularly inappropriate time to introduce measures of this kind. Inflation is high, interest rates are very high, and the pound is at a difficult level for exporters within the exchange rate mechanism. Yet the Government's response is to privatise the ISG division of the Export Credits Guarantee Department. How many handicaps is industry expected to survive under in this country?

Mr. Thurnham: The hon. Lady asks how many handicaps industry will have to suffer under. It would be a handicap if it had to suffer under the policies of Opposition Members. Has she not seen the figures for car exports? She has talked about exporters not succeeding, but the exporters of cars have succeeded very substantially

Ms. Quin: I hope to refer to some of the contacts that I have had with exporters who are extremely worried about the Government's policy in cutting back on exports. They seem to me to have a great deal more in common with the industrial regeneration ideas of the Labour party than with the ideas of the present Government.

Mr. Norris: rose—

Ms. Quin: If the hon. Gentleman will forgive me, I have already given way several times and there are quite a few arguments that I would like to make. Perhaps he will be able to intervene later on.
As the Minister pointed out, ECGD has a distinguished record as the world's most experienced export credit insurer and it has traded profitably for most of its 70 years' existence. Unfortunately—again, as has been pointed out —over the last decade it has been affected by the special circumstances of third-world debt, although in this respect it is no different from the credit insurers in most other countries. ECGD services are valued by large and small firms alike. Small firms in particular do a great deal of business with ECGD and are worried about changes that are being proposed. Even the large firms which are the prime beneficiaries from the project division none the less sub-contract in the course of their work to many smaller firms, which thus benefit indirectly from the support given.
It has been known for some time that the Government would be likely to propose changes in ECGD's status. The prospect of a genuine single market in Europe alters the picture—I certainly concede that—and it was felt that ECGD should have the flexibility to operate within the large single European market. This was one of the considerations behind the Kemp review and the different options suggested in that report for ECGD's future operation.
The Kemp report suggests a choice of three possible directions for ECGD. One was staying within Government, perhaps as a separate accountable unit. The second was to become a Government-controlled agency outside the civil service, and the third was to be a Government-owned company with the introduction of private capital probably after a four to five-year period. The reaction to the Kemp review at the time was generally favourable, although exporters were largely satisfied with ECGD services anyway and were not exactly clamouring for change.
What do the Government decide to do as a result of the Kemp review? Quite simply, they decide to ignore Kemp's recommendations entirely, take no notice of the wealth of advice they received at the time, and come out in favour of the immediate privatisation of the insurance services group. The transition period of four to five years becomes a transition period of 1·5 seconds, or however long it takes technically to create a Government-owned company and then immediately, in the same breath, complete the privatisation process.
The Kemp report also made it clear that there would be a continuing need for a Government-backed reinsurance facility in the case of political-risk exports. In this


legislation, however, the Government are proposing to limit their commitment to political-risk reinsurance for three years. The Minister today has sought to soften this particular commitment by saying that there would be some mechanism for reviewing the situation. Perhaps the Minister can tell us where the figure of three years came from and how it was arrived at. It seems a very arbitrary limit indeed. Perhaps he will specify in more detail what measures will be taken if, at the end of the three-year period, it is quite obvious that there is no real willingness on the part of the private sector to offer a reinsurance service, which is certainly needed.
At the same time as privatising ISG, the Government seem determined to weaken the project division of ECGD, which is to remain part of Government. The Minister has already referred to the changes which are part of the new portfolio management system for calculating the premiums that exporters will have to pay, and we know these will mean steep increases and a more expensive export service for medium and long-term exports. I understand that, overall, ECGD premiums are higher than those of most of our main competitors. There is much concern among exporters about what is happening.
All the Government's proposals—the immediate privatisation of ISG, the three-year limit on reinsurance and the introduction of the portfolio management system —are designed to ensure that British exporters get a poorer deal than their competitors. That is the real consequence of the Bill.
Not surprisingly, there has been an almost uniformly hostile reaction to the Bill. The survey that was carried out by Sedgwick James, the credit insurance brokers, found that only 33 per cent. of those questioned felt that the private sector would be able to satisfy the needs of the short-term credit insurance sector. But 91 per cent. thought that the Government were being unrealistic in their stated plans to get other countries to follow their lead in cutting support to medium-term export business.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh): How many people replied to that survey?

Ms. Quin: According to Sedgwick James, 60 per cent. of the people to whom it wrote replied. It tried to make it as reasonable a survey as possible. The Minister may suggest that the number was small, but much concern has been expressed by companies through chambers of commerce —the London and Birmingham chambers of commerce, for example—the British Exporters Association, the Confederation of British Industry and others. The Minister is trying to convince me that only a few firms are concerned about this, but I do not believe him. I know that that is not so.

Mr. Leigh: Perhaps I can help the hon. Lady as, unfortunately, she does not know the answer. Of 7,000 exporters, 55 were surveyed.

Ms. Quin: How many companies are covered by the chambers of commerce that I have mentioned and the CBI?

Mr. Hind: rose—

Ms. Quin: I have already given way to the hon. Gentleman. I should like to make some progress. He may get an opportunity to speak in the debate.

Mr. Jim Cousins: The source of the Minister's comments was the Financial Times, from which it appears that 92 exporters were surveyed and 55 replied. That puts a different complexion on the figure of 7,000 that he gave.

Ms. Quin: I am sure that the Minister heard what my hon. Friend said.
The overwhelming majority of respondents thought that the Government's tactics of trying to convince other countries to follow suit were unrealistic. Despite that vote of no confidence, the Government are sticking firmly ro that illusion. In answer to a presumably planted question by the hon. Member for Welwyn Hatfield (Mr. Evans), the Government stated:
The Government intend to press in international fora for other export credit agencies to charge more economic premium rates for export credit support, but, in the meantime, ECGD will be adopting new premium rates which will be matched more closely to risk."—[Official Report, 14 January 1991; Vol. 183, c. 359.]
In other words, we shall proceed no matter how slight the evidence that other countries will follow suit. That is an absurd way of proceeding and of approaching export credit support.

The Secretary of State for Trade and Industry (Mr. Peter Lilley): Labour Members want to subsidise everything.

Ms. Quin: The Secretary of State, from a sedentary position, is saying something about us wanting to subsidise everything. That is patently untrue, as he knows. We want our exporters to have the same facilities as our major competitors. The answer is as plain and simple as that.
At the time of the Kemp review, when the Government were considering the future of ECGD, many comments were received from exporters and from large companies. Most stressed strongly the importance of the existing service. For example, Hawker Siddeley said:
The future of the United Kingdom capital goods industry remains—as will all our competitors—virtually totally dependent on the ability to insure export business over the medium and long term. There is no evidence that this facility exists or will exist in the private sector.
Vickers plc said:
another advantage in retaining the Insurance Services group as a United Kingdom government agency would be its assured access to the vast ECGD data base which may not be available to a government-controlled company supported by private sector capital.
Perhaps the Minister will respond to that point when he replies. The Credit Insurance Association said:
We do not believe that the private sector could assume a significant proportion of ECGD's existing functions.
Many other quotes could be given. Since publication of the Bill, many companies have expressed concern to many of my hon. Friends in whose constituencies they are located and to hon. Members on both sides of the House.
The hon. Member for Leeds, North-West (Dr. Hampson) referred to Rolls-Royce in an intervention. Northern Engineering Industries, which is merged with Rolls-Royce, has written to many hon. Members expressing concern about the future of ECDG and that exporters will receive an inferior service.

Dr. Hampson: Has the hon. Lady read the evidence taken by the Select Committee on Trade and Industry from Rolls-Royce and Northern Engineering Industries, which says:


This should, in our opinion, take place as early as possible in order that ECGD's pre-eminent position in this field is not lost and continuity is preserved. Already the Dutch credit insurer is privatised and we see similar activities taking place in the relevant sectors by the French credit insurer. If the UK is to maintain its position in this field within Europe come 1992 it is important that steps are taken now to introduce private capital so that UK exporters may compete effectively with their foreign competitors.

Ms. Quin: I am grateful to the hon. Gentleman for reading that. That company wanted the same system to obtain here as on the continent. I have read that quotation and have it in front of me. I assure the hon. Gentleman that the force of its contribution is that we should be competing on equal terms. I contend that the Bill means that we shall not be competing on equal terms.
The timing of the Bill irritated many exporters and industrialists. It appeared just before the Christmas recess, with little publicity, and was orginally timed to be debated in the week of the UN Gulf deadline. That is typical of the rather furtive way in which the Government have treated the ECGD issue. The proposals on its future were first announced by the Government in a written answer to a planted question, rather than, as we had asked, in an oral statement on the Floor of the House, which would have enabled hon. Members properly to question the Minister. The privatisation of ISG was originally scheduled by the Government for April, but because of various difficulties that will not happen until July at the earliest.
The furtive and incompetent way in which the Government have introduced the Bill perhaps has much to do with the fact that they are divided about it. There is no doubt that the Department of Trade and Industry and the Treasury hold different views on it, and perhaps the Minister will give us some details of that. At the time of the Kemp review, it was known that the Treasury, or some in the Treasury, favoured the so-called zero option, ending Government support for export credit even for the medium and long term. The previous Secretary of State was well known as a hardliner on export support, and it was rumoured that he might consider privatising all the Department's work in export support.
There are still disagreements between the Treasury and the Department of Industry, as is clear from a leaked memo that was reported in The Guardian recently from the Private Secretary to the Chief Secretary to the Treasury to the Private Secretary of the Secretary of State for Trade and Industry. I apologise if that sounds like a passage from "Yes Minister", but the relevant extract says:
As for the short-term business, as you know the Chief Secretary is very concerned about your Secretary of State's proposals for large-scale government support for the privatised company.
That shows clear disagreement between the two Departments. The same memo refers rather ominously to
outstanding policy issues on reinsurance and national interest.
Perhaps the Minister could give us details of the exact disagreements. The present Secretary of State for Trade and Industry was previously a Treasury Minister. I wonder whether his promotion has changed his view. I also wonder what are the views of the various Ministers in the Chamber on the issue. It seems that different Ministers have different views.
In a letter to me some time ago, the previous Trade Minister, Lord Trefgarne, said:

I am sure that the changes…are essential to enable ECGD to maintain and improve the quality of its support to UK exporters.
What is the justification for that statement? I see the Minister for Trade nodding, so presumably he agrees with the statement. What studies have been done on the damage that the proposals are likely to do to industry? It is not clear why Ministers make sweeping statements without giving further justification.
Clearly, the Government are rushing to privatise the insurance services group of ECGD. However, it has to be said that there do not appear to be many bidders in the running for it. Perhaps the small number of bidders causes the Government some embarrassment. Furthermore, there are question marks about the suitability of some bidders and the consequences on the wider market if they acquire ISG. If ECGD's main competitor, Trade Indemnity, acquires the insurance services group, will there be a referral to the Monopolies and Mergers Commission because of its dominance of the United Kingdom credit insurance industry? It would be ironic if the Government, claiming as they so often do that privatisation will increase choice, are responsible for eliminating what choice exists in the export credit market.
If the Dutch insurer NCM acquired ISG, would it have the promotion of British exports at heart? As the official Dutch credit insurer, its remit is to help Dutch exports. In any case, it would be absurd and unfair if Dutch companies which used NCM's services were entitled to the back-up provided by the Dutch Government while British companies using the service were not entitled to such Government back-up.
If ECGD were sold to a company without much expertise in export credit services, would not our exporters lose in the long run? Such questions are important. I want the Government to tell us how many bidders are currently bidding and describe the nature of some of them. Parliament is entitled to that information.
It does not seem that the sale will be a great earner for the Government. The sum of £100 million has been mentioned. Perhaps the Minister will confirm or contradict that figure. Certainly it is a small amount of money. It might keep our under-funded health service going for an hour or so, but it would hardly tackle any of the long-term problems of our country, for which public expenditure is badly needed. What is the Government's estimate?
Unfortunately, we are handicapped in our work on the sale because financial details have not been made available to Parliament, even though some financial details have been made available to bidders. I noted that the Secretary of State said that he would make some information available in the Library. Will he make available the details that have been given so far to bidders but to which Members of Parliament have not been given access?
Even possible purchasers have not been able to bid in full knowledge of the facts. For example, in the information memorandum first issued by Samuel Montagu on behalf of the Secretary of State, bidders were given no information on the extent of Government support for reinsurance after the sale. Indeed, the relevant section of the memorandum reads:
Decisions on the scale and detail of government participation in the reinsurance arrangements for the new company will be taken when the outcome of the discussions with private sector reinsurers is known.


That is hardly helpful to bidders who want some idea of the commitment that they will be taking on.
The consequences of the proposed sell-off on the rest of ECGD cause the Opposition considerable anxiety. The losses of ECGD's projects side are considerable for the reasons to which I referred earlier. Therefore, there is a fear among exporters that once ISG is sold off, the rest of ECGD will be vulnerable to continued Treasury sniping —especially given the details of the Treasury's view which I gave earlier. Exporters also fear that ECGD will not be able to fulfil its proper role in promoting British exports in new and sometimes difficult markets.
ECGD is already being forced to take a hard line on cover for certain countries. The portfolio management system will simply make that worse. Indeed, exporters have told me that the uncertainty surrounding ECGD handicaps them when trying to win contracts. They cannot be sure what element of the equation the ECGD contribution will constitute. I hope that the Minister will comment on that. I have contacts with exporters who feel that deals are being held up because of the uncertainty surrounding ECGD.
Furthermore, the ECGD has been forced to take a particularly hard line on trade with eastern Europe, even though for both political and long-term economic considerations, links between Britain and eastern Europe need to be strengthened. It is ironic that the CBI recently launched an initiative to promote trade with three eastern European countries and the Soviet Union when of those four countries, three are off ECGD cover. That certainly does not make the CBI's role easy. I hope that the Minister will tell us whether that position will change because it certainly needs to change.
We all remember the previous Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), declaring that Mr. Gorbachev was a man with whom she could do business. Yet ironically, even before the recent sad events in the Baltic states took place, we were doing far less business with the Soviet Union than we did with the old, repressive but, I suppose, horribly reliable regime. The Government must address that issue quickly. It affects exporters in many parts of the United Kingdom. Indeed, I read recently that even the Scottish Herring Buyers Association was having difficulty in selling to eastern Europe as a result of the withdrawal of ECGD cover. It is important to have Government support for exports in such markets for both economic and political reasons. It is unlikely that the private sector, which must continually be mindful of short-term profits, could support such trade.
Throughout their term of office, the Government have claimed that they want a level playing field in Europe so that our industry can compete on equal terms. I state again that the Bill will do nothing to achieve that aim. Indeed, it will do the opposite. We should aim to give ECGD the same flexibility as COOFACE in France to compete for business in Europe but at the same time it should enjoy a similar degree of Government support for political risk reinsurance for medium and long-term exports. Why did not the Government simply seek to amend the ECGD terms of reference to give it that flexibility and those opportunities? Did they consider such a course? If not, why not?
We have many specific worries and reservations about the clauses and provisions of the Bill which I do not have time to list now but which will certainly be thoroughly aired in Committee. We are worried about the effects on

the work force, particularly in Cardiff, employment prospects and, for example, pension rights. There has been a lack of consultation with the work force, much of which has been loyal to ECGD over many years and surely has a real stake and interest in the future of ECGD.
It is clear that the Bill is an ill thought out measure which has been introduced in an incompetent and secretive manner. It is the result of departmental battles in which the privatisation dogmatists and cost cutters have won. Once again, the Government have shown themselves to be the anti-industry party which, for short-term and cost cutting considerations, is prepared to sacrifice our long-term economic well-being. The Opposition will rightly oppose the Bill, subject it to rigorous scrutiny in Committee and use every opportunity to point out not just to industry, but to the general public, just how foolish and ill-judged a measure it is.

Sir Geoffrey Pattie: I wish to declare an interest as non-executive chairman of GEC-Marconi.
The Bill is important because adequate financing arrangements are fundamentally important to successful export activity, on which the country's economic health depends.
There is a significant shortcoming in the philosophy that has underpinned our export credit activity for many years. That philosophy has been to offer credit only in a reactive manner, when our competitors have made a credit package offer and we have to match it or lose out. I know several cases in which a British product has won the support of a foreign purchaser in terms of performance, product support and delivery dates, only for the deal to be held up on the credit aspect, while other competitors are encouraged to enter the fray and improve their bids. Had our companies been able to make a pre-emptive credit offer at an earlier stage, a deal could have been concluded.
In some cases, the contract is lost following extensive negotiations, but in other cases—this is almost worse—the contract is secured after lengthy reactive responses by ECGD, but has cost us far more in the end than if our companies had been able to make a carefully judged pre-emptive credit offer earlier. I emphasise that I do not speak as, or on behalf of—to quote from today's Financial Times—the
whingeing exporters who want to give British exports away to countries that are unlikely to pay for them.
There are many British companies that have developed their export markets on the back of original contracts which contained export finance and which may have been more generous than the Treasury at the time would have liked. Much export business is long-term business, and the key factor is the ability to break into the market in the first place.
It should not be necessary to state such truisms in this country, which is so dependent on trade. I am not in any way averse to the concept of private capital being introduced into a hitherto Government agency, as one might expect from a Conservative Member—far from it. I also accept that, with the onset of the single Eurpoean market, it is clean and neat to make some new arrangements. But I am concerned about some of the assumptions that seem to underlie the Bill.
First, I see no signs of any of our EC partners, other than Denmark, making similar arrangements. The


obsessional phrase these days—the hon. Member for Gateshead, East (Ms. Quin) has already used it—is "level playing fields". In view of my earlier comments about the structural disadvantages for British exporters over the years, I hope that the Government will not be naive and assume that our partners and competitors will automatically seek to bring their arrangements into line with ours.
I hope that, when my hon. Friend the Minister winds up, he will give us details about exactly what our EC partners are doing, because there is an element of hearsay about present examples, which are not exact. The House needs an assurance that the Government will continue to provide support, including support in the national interest, for exporters on terms at least comparable with those offered to our competitors.
Secondly, the privatisation of the insurance services group will make the projects group position all the more exposed. I know that some in industry fear that the Bill could be a precursor to the abolition of the projects group, and I should like a reassurance on that.
Thirdly, for the smaller exporter, the presence of ECGD insurance—the fact that the small exporter has got it—enhances the quality of the exporter's receivables, thus creating an improved borrowing base when negotiating vital capital borrowings from his banker. That last point was made in virtually those words by Lloyds bank in its evidence to the Select Committee on Trade and Industry.
Fourthly, there are anxieties in some quarters about the capability and appetite of the private market to provide reinsurance. The three-year guarantee proposed by the Government may not be long enough. After all, the Kemp report spoke of a four to five-year transitional period. I should like an assurance that the Government will review the working of the system within three years of the legislation coming into effect. Industry would be entitled to expect that such a review should examine the successes and failures of the privatisation up to that stage and consider the issue of the Government continuing with some measure of support.
I know that many hon. Members want to contribute to the debate so I shall conclude by saying that, in introducing the Bill, the Government need to reassure industry. Times are hard, and markets are tough. The 1978 Act talked of "encouraging" exporters; the Bill uses the phrase "facilitating". That does not sound like a Bill with the degree and element of full-hearted, warm, supportive commitment that the industry would like and the economy needs.

Mr. Doug Hoyle: I am proud to say that I am the president of the Manufacturing, Science and Finance union. I hope that others who have to declare an interest can say, like me, that they are not paid for holding the office and do not receive any reward for it. However, the Bill affects many of my 650,000 members. Certainly it will withdraw an important ability to export from the two thirds of those members involved in manufacturing industry.
The Minister referred to the esteemed Lord Young, who used to provide the previous Prime Minister with solutions—thank goodness he has gone. The Minister also referred to the previous Secretary of State, the right hon.

Member for Cirencester and Tewkesbury (Mr. Ridley)—thank goodness he has gone; he would have got rid of all the support given to British exporters. The present Secretary of State is not a great deal different from the right hon. Member for Cirencester and Tewkesbury, but at least the total service is not being mutilated, if we are to believe what the Minister said.
It is noticeable that, although the Bill affects 25 per cent. of our exports, two very junior Ministers have been left to put the case for it to the House. One very new Minister, the Parliamentary Under-Secretary of State for Industry and Consumer Affairs, will reply to the debate.

Mr. John McAllion: It is sinister.

Mr. Hoyle: My hon. Friend the Member for Dundee, East (Mr. McAllion) says that it is sinister; I shall leave it to him to expand that point in his speech.
I should congratulate the Parliamentary Under-Secretary on his elevation to the Front Bench. As an opponent of his, I have not yet had an opportunity to do so, but I hope that he can provide some of the answers that were not provided by the Minister of Trade.
It was shown to me yesterday just how essential the Export Credits Guarantee Department is. I was in Liverpool talking to a company executive, who said that 86 per cent. of his product was exported. The company is in the Mexican market. The executive to whom I spoke was aghast that there could be any change in relation to export credit guarantees. He pointed out to me that the company is already 16 per cent. adrift of the terms of the Spanish offer in that market. It is able to remain only because of the quality of its product. When a firm starts from scratch in a new market, it will not have the advantage that customers already know their product.
The unwillingness of the private sector to provide this type of cover has been demonstrated in the past. Without such cover, many successful export initiatives would have been lost to this country. This is a blow to our export performance, and it comes at a time when our trade deficit is £15 billion. What a time for the Government to take another swipe at exporters and make life more difficult for them. I should have thought that the Government would be anxious to do the opposite, that they would want to strengthen the position of those entering the export market —a difficult field—and do all they possibly can for them, rather than injure them.
As has been stressed, privatisation applies to small and medium-sized firms—the ones that need most help. They are the companies that provide the dynamic element in our industry. It is they that initiate. They are also the ones, I regret to say, that suffer most from the Government's economic policy. Many of them have gone or are going out of business as a result of high interest rates and a very difficult home market. In their attempts to survive, they have had to turn to the export market.

Mr. Frank Haynes: A group in Nottinghamshire has three factories in my constituency. Not long ago, it was praised by the right hon. Member for Finchley (Mrs. Thatcher), who used to be Prime Minister, for its marvellous export record. Despite that, one of the five factories in the group closed as a result of the Government's policies. Yet it was making a marvellous export contribution. I support what my hon. Friend has


said about small and medium-sized factories, which have made such a contribution, being clobbered by the policies of a wicked Government.

Mr. Hoyle: I could not agree more. Indeed, praise from the right hon. Member for Finchley (Mrs. Thatcher) when she was Prime Minister, or—even worse—a visit by her to a factory, was usually followed by the firm's going into receivership.
Small and medium-sized firms ought to be encouraged to get into the export market, yet the Government are removing the prop that they need. These are the firms that are most at risk, the ones least able to bear the burden, the ones that will suffer most when a customer defaults. It is wrong that such firms should be left to the vagaries of the free market, yet that is what the Government are intent on doing.
Even Conservative Members have asked who will take over this function. Will a private monopoly be created? I should be interested to hear what the hon. Member for Cannock and Burntwood (Mr. Howarth), who said he was a creditor consultant, might say about maintaining competition in the market. What is going to be done to help the small and medium-sized firms that will find it so difficult to survive? I hope that they can be reassured. It would be interesting to hear the defence of this monopoly.

Mr. Hind: As I am sure the hon. Gentleman knows, the Export Credits Guarantee Department is not the only organisation in this field. There is a private insurance market that is used quite widely by small firms exporting from the United Kingdom. Consequently, there will not be a monopoly. In addition, other firms will have an opportunity to develop. The ECGD has tended to take on the larger projects, but there are facilities, through the projects group, to make such provision. There is not a monopoly, although it is true that one organisation will be in a dominant position.

Mr. Hoyle: We are talking about the insurance services market. What is being taken away is the public-sector element, which operates in an area into which the private sector is not prepared to go. That is the danger. In the letter that the hon. Member for Leeds, North-West (Dr. Hampson) and I wrote to The Times, we said that we hoped that, if this arrangement should go through, the Government would look at companies placed in this position and decide not to withdraw completely. I understood from the Minister's introductory speech—perhaps we will hear more in the reply to the debate—that it was accepted that there would still be a need for public-sector involvement in part of the market. I think that that is the point that was being made by the hon. Member for Lancashire, West (Mr. Hind).
Another difficulty will arise with the advent of the single market in 1992. Nothing in the legislation relating to the single market makes it necessary for the Government to take this step. We have heard that the only other Government contemplating such a course of action is the Danish Government. Certainly there is no sign of it in the case of our competitors in the European Community. I say again that, in this regard, there is no need for the Government to be a pathfinder.
At one time, I thought that the whole operation of the ECGD would be destroyed. I am very pleased that the judgment of the Kemp report—that there is no alternative to a Government scheme if our exports are to remain

competitive—has been accepted. Privatisation of the insurance group will secure the short-term credit proposals. However, this change is unnecessary and unwanted, and it will not reassure industry. The danger is that it could do great harm to British exports.
As my hon. Friend the Member for Gateshead, East (Ms. Quin) said, we are facing not only the single European market in 1992, which will bring with it more competition, but the collapse of the Soviet bloc and the eastern economy. There are more opportunities, but they will bring with them new uncertainties and risks. We should be encouraging companies to break into these new markets. They will deal with new ventures and new trading records and may be facing an uncertain future. They will have little market expertise, no credit history and therefore no credit rating. I am sorry to say that they will have to do all this against a background of continuing political uncertainty. If we are asking small and medium firms to enter that difficult market, it is incumbent on us to give them every possible support. Because the Bill will not do that, it is wrong to introduce it at this time.
The Gulf crisis proves that the risks for exporters have never been greater. Along with that risk, there are opportunities for exporters, and we are asking only for some help for them. Why should we tell them that they can go into the markets, but must do so with one hand lied behind their backs? We must ask why the Government have, against the advice in the Kemp report and against the lack of demand from exporters who said that they were satisfied with the ECGD, introduced the Bill at this difficult time. We heard no good reason from the Minister for Trade, so we do not know why the Government intend to place a further burden on the back of British industry, which is already reeling because of the difficult recession.
It has been suggested that the Bill has been introduced so as to bring us into line with EC policy, but that is not necessary. We see the difficulties for people entering the private sector underwriting business. There is no need for the Bill, and the exporters have not demanded it. The real reason for it is the Government's ideological and political prejudice. Once more, dogma is taking over from common sense. The Government have a hatred of everything that is in the public sector. They have to go for privatisation, whether or not it is better.
The Government should think again before inflicting this blow on British industry. The Minister for Trade is no longer here, so I ask the Under-Secretary not to stay within the Department and just have dinner with his colleagues. He should go out into the real world and see the difficulties that these companies are facing. He should seek their advice instead of doing what he thinks is best, because the Government think that everything must be privatised. If the Under-Secretary did that, he would come back with different opinions, and opinions different from those expressed by the Minister for Trade. The Prime Minister may have changed, but Government policy has not.
The Minister said the staff at Cardiff would be transferred to the private sector. What happens to the staff who do not want to be transferred? Will they be allowed to remain in Government service? Will they have a career? Will they be able to use their expertise? It is essential that we get some replies to those questions, because these people have done a first-class job, as British industry and


exporters have recognised. Anyone who cares about British companies and British exports should reject the Bill. I hope that the House decides to do just that.

Mr. Patrick Nicholls: I start by declaring my interest in the Hill and Smith group.
I thought that there would be agreement on a wide range of points across the House. I believe that there is that agreement, although the speeches from the two Front Bench spokesmen did not make it apparent. I say this for the simple reason that, as has been said before, we are a trading nation. We are a nation that succeeds or fails economically on its ability to export. Economically, we live or die by the success of our exporting industry. On that at least, we can agree.
An exporting nation must ensure the security of those in the business of exporting goods. It must consider what is necessary in the insurance structures that underpin that. In this day and age, a trading nation cannot thrive without having some structure or infrastructure to take care of the insurance aspect of exports. I am sure that that fact must be common ground across the Floor of the House. In a sense, all that we are talking about is how that is to be achieved.
The single criterion on which one can judge whether the Bill deserves the support of the House is this. Will it make better or will it make worse the position of exporters? Will it improve the security of exporters, in so far as one can have security in such a risky trade? The Bill succeeds or fails on its ability to fulfil that one central point.
When one considers the needs and demands of those who export, it is clear that there are only two options. There can be disagreement about which option to go for, but one has to be chosen. In so far as one can detect a policy from what we heard from the hon. Member for Gateshead, East (Ms. Quin) she appeared to be supporting the first option—maintaining the status quo. I do not say this in an adversarial way, but I am sometimes slightly surprised by the conservatism of Labour Members. They appear to think that, because something has been done —in some ways very successfully—in one way, looking at it in terms of future demands and needs, and because there is a good idea in there trying to break out, that is bad. One of the curious things about our debates is, at times, the radicalism shown by those on the Government Benches and the conservatism shown by those on the Opposition Benches.

Ms. Quin: I did not defend the status quo. I said that there needed to be changes so that the ECGD could take advantage of the European market, but that I did not like the changes proposed by the Government because I felt that they would weaken, rather than strengthen, us in the face of our European competitors.

Mr. Nicholls: It is one thing to say that one is not in favour of the status quo, but that position becomes somewhat less convincing if one takes a very dogmatic attitude to any of the reasonable, feasible proposals which are put forward against it. I shall develop my argument and if the hon. Lady is still not totally convinced, I shall give way again, if necessary.
The only two options that hon. Members need to think about in considering what is the appropriate insurance structure is either to maintain the status quo or something pretty close to it. In other words, we should leave it up to the state or, alternatively, turn it over to the market. The moment one talks about turning this over to the market, one can almost hear Labour Members writhing and taking the view that that lets in laissez-faire politics. To use a much more neutral word in the more neutral times in which we live, it is not so much a question of leaving it to the market; it is a question of leaving it to those who actually know how to handle these things. I am referring to the people with particular expertise and particular interests.
In other words, one is saying that, rather than this being done by the state, it would be better if the whole insurance infrastructure so far as possible were left to the private insurance industry. As a politician and an ex-Minister and as somebody who has worked with civil servants and who has high regard for them, for the most part I prefer to confine politicians and civil servants to those things which politicians and civil servants, by their talent or lack of it, are qualified to do. I do not see it as the role of politicians and civil servants to get involved overly much in matters which could be more properly accommodated by those who actually know how to do them.
If one accepts, as I do, that the right way forward for insurance in terms of exports will for the most part lie in the private sector, then certain considerations and consequences flow from that. One of them must be examined and thought about, although at the end of the day it is not the fundamental criterion to which I referred a moment or two ago. One consequence will be the employment effects for those who are employed within the present structure. I accept that to the hilt. I have a particular interest and I shall refer to that aspect in a moment or two. As I have said, it does not seem to me that the status quo is a viable option. The only sensible option that remains is that which underpins the Bill, which is to privatise this sector of the ECGD and to proceed in that way.
In this debate, the Kemp report has assumed almost the importance of the Bible on the basis that we have all decided to quote it for our own purposes. Inevitably, when dealing with such a report one has more or less to dine a la carte. I do not think that it would be appropriate even in a debate such as this to quote the Kemp report at any great length; it may be that others will wish to do so rather more in extenso. But it is a fair point to make that that report recommended, albeit over a slightly different time scale, what the Government are now doing in this Bill.
Of course, times move on, and the point has already been rightly made that the report was commissioned two years ago. That has implications in terms of the European dimension and I shall touch upon that topic in a moment. It must be said that there is increasing competition in the credit insurance market both in the United Kingdom and in the European community. Obviously that is led and generated by the private sector and we cannot turn our face against it.
We also have to face the fact that in the EC credit insurers are increasingly offering policies which cover both domestic and export credit possibilities. Once again that is a relatively new and increasing factor which must be taken into account. That is a trend which, in my judgment, can only be intensified by the EC directives we have seen of late


in the non-life insurance sector of the industry who allow private sector insurers registered in one state to do business in another state in the community, provided that those are private firms and do not operate with state backing.
For the purposes of this debate I do not have to say whether it is a good idea or not, but the fact is that that is the world in which we live and that is what is coming out of Europe. For better or worse, I say, gritting my teeth, that that is something we simply have to live with. That is the fact of life in Europe at the moment. If the insurance firms concerned are state backed as opposed to being backed by private firms, they will be unable to operate. Therefore, I believe that it is unrealistic to look at what the position was in 1988 when the report was first commissioned. We should look at the position in which we find ourselves today. We must face up to that consideration.
Where do we go from here? What other possibilities remain? One point that occurred to me when l was preparing my thoughts for this debate, and it is a point touched upon by the hon. Member for Gateshead, East (Ms. Quin), relates to the possibility of altering the enabling legislation. I understand that that would be possible. It would be feasible, in the short term at least, to alter the legislation so that that section of the ECGD could compete for business other than that to which it is presently confined. In a sense that would be worth while. There would be the possibility of other forms of trade, other business or cross-subsidy. Once that is done we have to face the European dimension and how we cope with it. If we proceed in that way, we may be able to loosen things up in the foreseeable future, but after that we shall have all sorts of problems.
Again reference has been made, and it is a theme that will run through this debate, to article 92 of the treaty of Rome which makes it quite clear, as I understand it, that any insurance agencies which adopt policies which in a sense provide aid and in so doing distort competition are likely to be outlawed. I can understand people making the point that this has not happened yet, but that carries the same sort of conviction as the character who falls out of a 20-storey building and who, as he hurtles past the 18th floor, says, "So far so good."

Mr. Alex Carlile: I ask a question in a genuine thirst for knowledge. The hon. Gentleman said a little earlier in his speech that the fact that Mr. Kemp reported two years ago has some implications for Europe. In fact, Mr. Kemp reported 18 months ago, but that is not a point that I wish to press. Article 92, as I understand it, has not changed in that 18 or 19-month period. So what are these implications which arise from the fact that Mr. Kemp reported some little time ago? I should be interested to know the hon. Gentleman's view.

Mr. Nicholls: That is a very fair point, it touches particularly on the European dimension, and I shall move to that almost immediately. The significance of the Kemp report is that it was commissioned in 1988 and published in 1989. There is not much point in working out precisely the month in which a particular event took place. I am saying that when one is dealing with Europe one has to try to keep ahead of the game. One must try to foresee the way in which fashions in Europe are going, rather than finding at the last moment that one has a problem to cope with.

Mr. Alun Michael: The hon. Gentleman agreed that the question on intervention was reasonable. Will he please answer it? This Government do not have a reputation for trying to stay ahead of developments in Europe on the environment, agriculture, trade and industry or anything else. On this issue, time and again we have been asking Ministers to tell us what are the legislation and regulations concerned and the reasons for jumping in this fashion. Will the hon. Gentleman tell us?

Mr. Nicholls: As I said when replying to the more helpful and more thought-out intervention of the hon. and learned Member for Montgomery (Mr. Carlile), the fashions in Europe will change. Fashions do change. Anyone who has ever been involved in considering the social charter will know that once an idea gathers force in Europe, Europe and the European institutions may seem rather slow moving and monolithic. When the process of change starts, it is essential to keep ahead of the game. That was the point that I was making. I said that I would deal with that topic in my own time, and I shall.

Mr. Norris: I commend my hon. Friend for what he says. He has hit the mark. There is no need to be sidetracked down a legalistic alley by the hon. and learned Member for Montgomery (Mr. Carlile). It is clear from article 92 of the treaty of Rome that the whole drift of competition policy is against Government intervention to distort competition. Therefore, my hon. Friend was right in his analogy of the so-far-so-good victim of a defenestration. As my hon. Friend suggests, were we not now to take account of the fact that European rules will inevitably lead to the point where Government subsidy of this sort of service is outlawed, the Government would be failing in their duty to the very exporters whom the Bill aims to support.

Mr. Nicholls: My hon. Friend has it exactly. The point in essence is simply that, if any hon. Member thinks that an article in the treaty of Rome, which could be used to Britain's detriment, would be allowed to lie fallow in Europe, he would not be living in the real world. The point simply illustrates the utter confusion in the minds of Opposition Members. From being violently and rabidly anti-Europe, they have become so communautaire that recently, when I attended an assize held in Rome which was the first conference of EC Parliaments, the Labour delegation voted to accept, virtually without amendment, a communiqué calling for economic and political union. It was not a question of them suddenly deciding to dip their toes in the water. They went from violent opposition to ecstatic surrender.

Mr. Haynes: I thought that the hon. Gentleman would be fairer than to accuse Labour Members in that way on Europe. When the decision was made in the House to go into Europe, Members on both sides were opposed to it, so the hon. Gentleman should be fair about it.

Mr. Nicholls: The hon. Gentleman knows the high regard in which I hold him. I would be upset if I thought that, whatever else he thought about my views, he thought that I was being unfair to him. The only point that I was trying to make, in my usual helpful and non-adversarial way, was simply that, if one were looking for a consistent policy on Europe one might be expected to find it in a party which, for all its internal divisions on the subject and


for all its changes in emphasis, has at least maintained a consistent position before the electorate. If the hon. Gentleman feels that I was less than fair in making that point, I can understand it.
What alternatives to the ideas put forward in the Bill have come from Opposition Members? We have heard that they think that the status quo could be altered to advantage. We have not heard precisely how, but we know that it must not be altered in this way. But it is difficult to find a consistent policy from Opposition Members. The moment the word privatisation is mentioned it is like red rag to a bull. The Bill was described by the hon. Member for Warrington, North (Mr. Hoyle) as an exercise in dogma, or something like that. It would be difficult to find a more dogmatic and doctrinaire attitude than that of the Opposition who say that they do not like what there is at the moment, that they have no idea how to change it, but that they do know that anything that the Government come up with will be unacceptable.

Mr. Hoyle: I said that not only did I think that the Government were making a change for the sake of it, but that the exporters did not want such change. It is not a matter of dogma on our side or on your side. It is you who insist on instituting such a change against the advice of those who use the service.

Mr. Deputy Speaker: Order. It is not my dogma.

Mr. Hoyle: Of course, Mr. Deputy Speaker. You never believe in dogma. You are very fair.

Mr. Nicholls: There are no dogmatic or doctrinaire attitudes on the Conservative Benches, either.
Once again, the Opposition raised the terrible bogey man of what would happen if some foreign country were to take over. It is remarkable that, despite the Opposition's communautaire policy which leads them to go to Rome and, in a spirit of enthusiastic surrender, yield themselves up to European union, the moment that there is a possibility of a foreign company having an interest in Britain, the Opposition are prepared to go to the barricades about it.
Export is a two-way street. The idea that we can have some mad, potty world in which all we have to do is to export our goods, industries and services without making provision for the import of services and goods is unreal. Whether a Dutch or any other company were to have such an interest in a reinsurance firm within the private sector, at the end of the day it would be acting for the reason that business men always will act—to make a profit. It is that word again. The idea that some private company would try to so construct its insurance arrangements as to make it virtually impossible for Britain to export in such a situation to do themselves some good is a marvellous idea, an exercise in a certain type of xenophobia, but at the end of the day it is completely unreal.
The hon. Member for Gateshead, East (Ms. Quin) had a pile of papers a great deal larger than mine and I was waiting for her to read them, but I am happy to say that that did not happen. One of those papers was pink and it occurred to me that it might be today's Financial Times. Picking up a theme that I have heard so many times from the hon. Member for Ashfield (Mr. Haynes) I thought that the hon. Lady, knowing of commentaries which are quite

against the position that she has adopted, would bring them to the House, almost as one would do in a court of law, and say that although she has come up with ideas, as one would expect, some of the evidence was against her.
Perhaps the hon. Lady will refer to the Financial Times when she replies instead, but I suspect not, and one can see why.
In today's Financial Times there was a lengthy critique entitled "Breaking Cover at ECGD". Because the paper's name sounds vaguely capitalistic, some might have the idea that it is a rabid tabloid which panders to the worst fantasies of the right of the Conservative party. But that optimistic view, which I should like to think was true, is not borne out. Anyone who has had any acquaintance with the Financial Times, especially on employment matters, and has seen the way in which they are handled, will know that it writes with great knowledge and with some considerable skill, not automatically from a pro-Government point of view.
Today's Financial Times has a number of things to say about the Bill and what our attitude to it should be. It picks up exactly the point made by the hon. and learned Member for Montgomery a few moments ago. It starts by reviewing at some length the sort of difficulties in and objections to the Bill. It makes the point that the Kemp report, if not all things to all men, certainly has something for everybody. But it then goes on to say:
None of these is ground for abandoning a sale whose original motive remains valid.
It continues:
Without new freedoms ECGD will lose ground to UK and continental competitors.
That is exactly right. The Financial Times has no axe to grind. That is its reading of the situation. It goes on:
Admittedly, privatisation has not yet been forced on the government by the European Commission. Simply changing ECGD's charter might allow it scope to compete in the single market.
Then it comes to a point which is obvious to anybody who has had any contact with Europe, whether within or without government, in terms of the real world. It says:
But Brussels is looking much more closely at subsidies implicit in export credit insurance. Privatisation is much the cleanest approach.
That is what is being said. That is not the situation that existed 10 years ago, or even five years ago. That is what the Financial Times says today about this measure—that privatisation is by far the cleanest approach; that we should not take comfort from the fact that the European Community has not done it yet; and, most important of all, we should recognise there are difficulties but we should not make the mistake of thinking that those difficulties are insurmountable.
On employment prospects, I was extremely pleased to see that the duty regulations are there so that provisions relating to redundancy will be continued and that there will be continuity of employment. Some people may claim that that is the minimum requirement, but there is not just the standard protection of the regulations; there is also protection for the enhanced redundancy payment as well. The point has been made very forcefully that transfer will have to be voluntary; that there will be no compulsion. The terms and conditions will be at least as good. Clause 9 provides quite specifically for the Transfer of Undertakings (Protection of Employment) Regulations in the way that I have described.
It could be asked whether that gives total protection. Could the Minister or anyone else absolutely guarantee


that the position of the civil servants who transfer will be precisely the same so that their jobs are secure? Of course not. Surely we have moved away, have we not, from the idea that there is any such thing as total security in employment?
If you, Mr. Deputy Speaker, were working in the ECGD and were concerned about your job prospects, would you feel safer in a structure which takes account of the changing times and of the fact that one cannot continue in the old ways for ever, but at the same time says that as far as possible the previous conditions enjoyed in the civil service regime will be replicated under the new regime? That is not a guarantee because there is no such thing, but it is really the very best deal that can be obtained in the circumstances.
Yes, there can be problems in setting up a structure in this way. As in any legislation, one is trying to look into the future on the basis of the best information that one can get. If we look at what is happening in Europe today and at what exporters need and if we look at the Kemp report in the light of where we are now, not back in 1988, we realise that this Bill and the policies in it are the right ones for our exports. That is why the House should support this Bill.

Mr. Alex Carlile: In the part of Wales where I live, it is normal at funerals to spend a little time praising the deceased. Therefore, I think it is right to start my speech by saying that the Export Credits Guarantee Department has done an excellent job for many years and that many industrialists, and other people who are beginning their business lives as entrepreneurs building up manufacturing industries, view with some alarm the change that they see taking place, the consequences of which they are unsure of. Change for change's sake cannot be justified; but if the change is to produce a more beneficial export environment for potential exporters, the Government will have succeeded in their aims, whether these are brought about by dogma or on empirical grounds.

Mr. Gerald Howarth: The hon. and learned Member should make it perfectly clear that ECGD is not dying; it is going to a better place.

Mr. Carlile: It is a bit of a mixed bag, because part of the ECGD will continue to survive. This is a form of medicine that we have yet to apply to human beings. Part of it is possibly going to some other place, and the hon. Member has a particular interest in that place, which he has frankly declared; that is probably why he thinks it is better.
This Bill emanates from a Government Department which has become renowned for the political and economic dryness of its Ministers. They are dry and proud of it—drier than those in any other Government Department. Indeed, it is a Department in which those copies of the former Prime Minister's Bruges speech which are not framed are heavily dog-eared through repeated reading, in an effort to check that what is being done fulfils the requirements of "Brugesism".
It follows that this anticipatory obedience which the Department of Trade and Industry wants to show to a possible future interpretation of article 92 of the treaty of Rome is a little uncharacteristic. I have been trying to

think of an analogy, and the best I can come up with is that of the footballer who rushes up to the referee during the first half and says, "Excuse me, ref, but I anticipate committing a professional foul in the second half, so would you please show me the yellow card now to try to stop me doing it then?"
That is certainly not a characteristic approach by this Government and one is tempted to the view that, although dogma may sometimes be logical—it may be the best basis for a decision if it is right—there is nonetheless more than a suspicion of dogma in this early progress by the Government to privatising the insurance services group of ECGD.

Mr. Norris: The hon. and learned Gentleman referred to the attitude to Europe of Ministers in the Department of Trade and Industry. As the only wet ever to have survived in the Department—and that was not for long —I cannot comment on that. If there is a cynicism among some people in this country about Europe and the difference between what is said and what is done in Europe, it is precisely because in Britain it is clear that progress towards the single market, which is the single greatest manifestation of something practical that can happen in Europe, is much further advanced than elsewhere, where there are many more interventions by state organisations than in the United Kingdom.
While I do not want to interrupt the flow of the hon. and learned Gentleman's argument or his interest in Gazza analogies, may I suggest that it is entirely proper that this Government should now be addressing the question of anticipatory legislation in the right spirit—that is, believing in the single market and wanting to see it completed as soon as possible.

Mr. Carlile: As ever, the hon. Member for Epping Forest (Mr. Norris) makes a very interesting point. However, I am slightly puzzled by the logical analysis he makes, because it seems to me that, in the decision they have taken in this Bill, the Government are running the risk of putting British potential exporters at a disadvantage compared with some of their European competitors, whereas in some other respects, such as going enthusiastically for 1992, they are trying to put British industry at an advantage compared with some other countries which may in certain respects have been a little slow.
I believe that it is contradictory to the future practical prospects of the export credit guarantee systems, and of exporters, to privatise the insurance services in this way and at this stage. It would have been far better for detailed discussions to take place within the European Community, so that we would have a clear picture of the way in which other member states were likely to react to the possible breach—it is only a possible breach—of article 92.
The phrase "level playing field" has already been mentioned often in this debate. It is important that our exporters should not find that, as a result of a Government decision the motive for which is privatisation, they are at a disadvantage because other countries have not only failed to move as quickly towards obedience to the interpretation of article 92 in relation to 1992, but have no intention whatsoever of doing so. Our anticipatory obedience to article 92 is a clear potential disadvantage for British exporters.
Insurance—particularly export credit insurance, which is a form of factoring—is a high-risk business, as I am sure the hon. Member for Cannock and Burntwood (Mr. Howarth) who declared an interest in Trade Indemnity, would readily acknowledge. It is therefore a business in which the initial profit discount, or premium, must be fairly high. There is a danger that a company in the private sector will be forced in certain transactions to set its premiums so high that smaller companies will be unable to manufacture goods or to provide services and sell them at the net price that they will receive.
That is not a criticism of companies such as Trade Indemnity. In the ordinary commercial sphere, they provide an important service—for example, in respect of straightforward commercial factoring—but it is one generally taken up by companies that are in the growth phase of their existence and not in their early stages, nor in their later stages either.

Mr. Gerald Howarth: The hon. and learned Gentleman makes a fair point about a matter of some concern to small and medium-sized businesses. However, he may agree that an important point of principle is at issue in respect of reinsurance. The strength of reinsurance is the test of availability of cover. Those who oppose the Bill argue that the strength of reinsurance provided by the Government's bottomless pit—that is, the taxpayer—represents strong reinsurance cover and that it has to be demonstrated that similar cover will be available in future.

Mr. Carlile: The hon. Gentleman makes an important and valid point, and it is well taken. However, at this stage in my argument I am more concerned about the initial situation, when a potential exporter tries to obtain a guarantee. If I were a small manufacturer of goods for which I saw export potential in, for example, a South American country, I would be concerned not so much about the reinsurance aspect as about the amount of money that either ECGD or Trade Indemnity, or whoever, will take off my price, and how much profit I will be left with at the end of the day. I believe that there is a genuine fear—which I hope will prove unjustified—that small companies will find it difficult to trade in exports to risk countries if they are confronted with the high premiums which I anticipate.
The Kemp report did not recommend that the Government should aspire to withdrawing their support completely. It stated:
This would be a very high risk policy and would be strongly opposed by industry. It is unlikely that the private sector would adequately supply cover against political risk, for small businesses, or provide supporting advice in the way in which ECGD does at present.
That shortfall, foreseen by Mr. Kemp, will remain; and will continue to exist as a consequence of the Government's decision to privatise in a hurry.
When the Minister replies, perhaps he will explain why the Government decided to reject the option in Mr. Kemp's third recommendation, that four to five years should be allowed before introducing private capital. Ministerial statements have developed in response to that recommendation. When the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was Secretary of State for Trade and Industry, he spoke of
converting insurance services into a company and the injection of private capital quickly thereafter.

That was something closer to Mr. Kemp's third option than the measure now before us.
By 26 July last year, the then Minister and present Secretary of State said in a written answer:
I have decided that the short-term business of ECGD should be sold by means of a competition
and that the sale should be completed
as soon as possible thereafter."—[Official Report, 26 July 1990; Vol. 177, c. 410.]
That is, after April 1991. It would be genuinely helpful to know why the Government decided to accelerate that process in a way that is inconsistent with both the objective and the carefully researched views expressed by Kemp.
That action is not consistent either with the wishes of British commerce and industry. Earlier, there was a contentious reference to a report by the credit insurance brokers Sedgwick James, the results of which were summarised in the Financial Times on 10 October 1990. So that the Minister will not leap to his feet and savage me, I concede immediately that only 55 replies were received to the 92 copies of the questionnaire that were distributed —which, on the face of it, is a very small sample.
However, as the hon. Member for Gateshead, East (Ms. Quin) fairly pointed out, although some of those invited to reply were large-scale exporters, others were organisations representing large numbers of exporters in general. Bodies such as the London chamber of commerce carefully collate and cautiously analyse their members' views before expressing anything that could be remotely described as a collective opinion. Although I concede the sparsity of the sample in that survey, I hope that the Minister will recognise that at least the opinions given were informed opinions, based on careful consideration of the issues.
I should add that it is the best evidence we have. I am not aware of any other survey, or of the Government having sought to collate the type of information carefully obtained by Sedgwick James. Of the respondents to that survey, 71 per cent. said that they would review their business strategy if British export credit facilities ceased to be competitive with those of other countries, and nearly half—and this is a shocking feature—replied that they would switch productive investment and procurement to other countries having better export credit arrangements. Some companies even said that they would cease to export to certain markets, which is understandable.
This hasty legislation has been cobbled together to produce a piece of privatisation of a less contentious nature than others, one that would not attract so much public notice, to fill part of a thinnish parliamentary timetable. I suggest that at best the Bill is premature, and that at worst it is, on its merits, wrong.

Dr. Keith Hampson: An hour ago, I thought for a moment that, for the first time in 17 years, I would be called to speak before 6 o'clock. However, right hon. and hon. Members have been so gentlemanly and polite today in allowing many interventions that the time has moved on. Nevertheless, I am glad to be of assistance to the Treasury Bench in making an early and extended speech, rather than a late and short or squeezed contribution. I hope that my hon. Friends on the Treasury Bench will not take the hint and pursue it in Committee.
First, I must declare an interest as I am a consultant for a company which is an adviser to GEC.
Some of my remarks will reinforce those made by my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie). The hon. Member for Warrington, North (Mr. Hoyle) and I wrote a letter to The Times, as we are both members of the Select Committee on Trade and Industry. However, I think that our views diverge from there on, because he made certain remarks about the economic cycle, whereas it is my view that, if there is a complaint to be made, it is that the Bill should have been put before the House a year ago during the 1989–90 session —as indeed it would have been, but for a somewhat unseemly dispute between officials at the Treasury and at the Department of Trade and Industry.
I would certainly argue in favour of the merits of that part of the Bill, on the basis of the evidence heard by the Select Committee and contained in the Kemp report. I was impressed that the Kemp report did not commit itself absolutely to a long period as a Government holding company before bringing in private money. Other options are considered and some of the evidence, for example that from Rolls-Royce, suggested that the ECGD had become more commercially oriented in recent years. As a result, there had been positive benefits and it was putting together more imaginative packages. Confiscation insurance was cited as an example. The evidence also suggested that privatisation would maintain progress, at a time when there is growing demand in Europe. That is what it is all about. We were unnecessarily restricting one of our major financial industries, at a time when the European financial services market was growing.
I fully support privatisation. Nevertheless, as was pointed out in the Financial Times, British industry is "whingeing" about it. Let me put it another way, it is not at all happy about some of the other aspects; that is where I agree with my right hon. Friend the Member for Chertsey and Walton. GEC is the largest client of the ECGD, spending more than £1 billion per year in insurance. There are about 12,000 accounts. However, ECGD is not really about insurance. It has the single statutory duty of encouraging British exports, and it is in that context that British industry is expressing its unhappiness, because we have never needed exports more than we need them now. Competition has never been more fierce and there have never been such opportunities, especially those in eastern Europe at present.
That being said, if one is not careful one can come to conclusions which do not stand up, by assuming that other countries always do things better, and more generously than we do. For example, if one studies some of the evidence to the Committee about the situation in eastern Europe, it does not show that the German or Italian credit agencies were offering anything other than short-term cover, on much the same terms as the ECGD, in the Polish market.
As stated in the letter which I signed with the hon. Member for Warrington, North, my first criticism is the lack of detail during the sale, both for potential buyers and for those hon. Members who take an interest. One could argue that more information would have been available from a private company than has been available from a state operation.
A more central criticism—I am seeking further reassurance about this—is how the high political risk markets will be handled. I understood my hon. Friend the Minister, in his opening remarks, to be giving a key reassurance that there would be a period during which the

new privatised company would gain reinsurance from the retained ECGD Government operation. British industry will want to know our intentions as regards the length of that period. Will it be three years, or will it be abandoned in less time? Could it run beyond three years? I think that British industry will take the view that there should not be an artificially imposed time limit.
Many people think that the private sector would not be able to pick up suitable premiums in many difficult political markets to enable smaller and medium-sized companies to get the right price for their products. Therefore, we should not abandon that principle of reinsurance, and I recommend to my hon. Friend the Under-Secretary that we keep the situation under review and wait to see at what stage, if any, in the near future the EC produces a directive. If, as the years go by, industry can show that there remains a real need for it, we should continue to supply back-up.
There is special concern about that aspect and the Guardian newspaper released some Departmental papers about it. The Treasury wrote to the Secretary of State's private secretary as follows:
As for the short-term business, the Chief Secretary is very concerned about your Secretary of State's proposals for continuing large-scale Government support for the privatised company
Anyone reading that will realise that those remarks take us directly back to the zero option. Has the Treasury given up the zero option proposals? We all assumed that it had given them up for long-term projects, but that Treasury mentality seems to remain. That sort of evidence of the Government's intentions is what has been disturbing British business. We should wait and see how the situation develops.
Some of the gentlemen who gave evidence to the Committee on 4 July 1990, when asked what the ECGD's premium rates were like compared with those of our competitor countries, replied that the ECGD rates are sometimes higher by a factor of two, and occasionally more. If that situation is maintained, there will be be a level playing field.
As the letter which the hon. Member for Warrington, North and I wrote to The Times yesterday states, it is vital that we give an assurance to British industry that, so long as the playing fields are not even, we will use some mechanism—the reinsurance aspects of the privatised company—to enable our companies, especially small and medium-sized businesses, to have access to those markets. That is what the ECGD has always been about. It was created so that we could lower premiums and establish level playing fields.
GEC sent some comments to members of the Select Committee last week, in which it stated:
There is no evidence that our overseas competitors are being subjected to the same changes through a withdrawal of Government support for exports.
So, will Ministers give a commitment today that, until such time as there is evidence of similar changes for our overseas competitors, there will be a commitment to maintain support in political high-risk markets? As the GEC document points out, if one does not
Whereas Government has a role in trying to boost export activity, a commercial agency
primarily has as its goal
the maximisation of its returns",


and therefore is either not likely to take the risk of insurance or would substantially raise its premiums. That is a major concern.
As regards the Treasury's attitude to long-term projects, page 98 of the Kemp report states:
As there is absolutely no prospect of a world free market, without interventions or support by governments, being established, the use of export credit agencies by competitors, within the scope of the rules of the OECD Consensus, is a fact we must take into account when deciding our own policy".
Will my hon. Friend the Minister give a complete commitment that that view is Government policy, and that no change is planned?
If we are not careful, the Treasury's thinking on industrial policy will prove to be the worst form of "short-termism" that British industry faces. The Treasury memorandum on the ECGD caused great alarm in the Select Committee, as we said in our report. According to the memorandum, the reason for the lack of private sector interest in export credit insurance was
the existence of Government schemes. The withdrawal of such schemes should stimulate the introduction of private sector alternatives".
I do not accept that that has been proved. The memorandum also stated:
The withdrawal of subsidies will have 'a beneficial effect upon the rest of the economy which is relieved of the burden of paying for them."'
We encounter that sort of attitude all too often. Understandably, every Treasury has an intrinsic dislike of subsidies, and of any assistance that involves taxpayers' money. Notwithstanding that, all Exchequers in all industrialised nations provide subsidies to some extent, as they always have done in this country.

Mr. Gerald Howarth: My hon. Friend is right, of course, but surely our objective should be to get rid of such subsidies across the board, so that taxpayers throughout Europe can stop financing the export of goods for which no one can pay.

Dr. Hampson: That is precisely my point. I have urged repeatedly that we should not proceed too far in the present direction. Although I accept that a privatised company will need some assistance in certain markets until the grand design has been achieved, no one who has examined the position sees any evidence that we are anywhere near that stage. I represent a textile-producing area, and I have come across the same attitude in that context—the belief that, if textile subsidies are withdrawn, consumers will instinctively buy imports because they are cheaper, and will therefore have more money in their pockets to boost other aspects of the British economy. That view is contained in the Silberston report.
The answer is that, although consumers might spend in other sectors and increase growth rates in the new service industries in the south-east, they would not necessarily spend in a way that would create or maintain jobs in the north. What that short-sighted, short-termist attitude overlooks is the "cascade effect": if the major players in the game are not assisted, all the small sub-contractors and suppliers will suffer as well. It was absurd bottom-line thinking on the part of the Treasury to predict a short-term loss of £1·5 billion per year as a result of the ending of long-term project help. The Treasury did not

take into account the way in which major companies enter new markets, open them up and establish longer-term business contacts for both themselves and their suppliers.
Although I welcome unreservedly the privatisation of the short-term insurance services group, British industry undoubtedly needs reassurance that the remaining ECGD will continue to assist the new privatised company in especially politically difficult markets. We need reassurance, too, about Treasury thinking on the long-term project group. Above all, we need to create a climate in which British industry feels that it is wanted and encouraged by Government, rather than an alarmist state of mind. I believe that the British Treasury has gained far too strong a position in industrial policy making, and that that is the reason for the reaction of British industry.

Mr. John McAllion: Let me join other hon. Members in declaring an interest. I act as parliamentary consultant to the National Union of Civil and Public Servants, many of whose members will be directly affected by the privatisation. I am proud of my association with the union, but, naturally, I receive a consultancy fee. I assure the House that I donate the whole of that fee to my local Labour party in Dundee. If any Conservative Members feel particularly guilty about any consultancy fees that they may receive, I recommend the same course to them. I will give them the name and address of the treasurer of my local party; we need the money more than they do.
At least one faction of the ruling Conservative party has long nourished an obsession with privatisation. The faction to which I refer is, of course, the No Turning Back group—or, as I heard a Conservative Member describe it, the No Coming Back group; no coming back after the next general election. The tragedy is that the supporters of that faction have risen to the highest levels in the present Government: I understand that the Secretary of State for Trade and Industry is an erstwhile supporter. Indeed, he seems to support it still, for he has brought to the Department not only his own obsession with privatisation but his No Turning Back fellow-traveller, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who is now Parliamentary Under-Secretary of State for Industry and Consumer Affairs.
What I know of the background of both men convinces me that the only rationale behind the Bill is that privatisation obsession. Why else should it not only unite Opposition Members—not always an easy task—but attract to the same anti-Bill coalition representatives of the trade unions, the Confederation of British Industry, the British Exporters Association and many chambers of commerce? No doubt some Conservative Members find that an even more unlikely coalition than the one that has formed in the Gulf over the past few weeks, but I can tell them that its members had been united by the Government's failure to provide any justification for the measures contained in the Bill.

Mr. Gerald Howarth: I know that the hon. Gentleman did not intend to mislead the House when he included the CBI in his list of the Bill's opponents. However, according to a CBI brief which I have here, that organisation supports the Bill in principle. Perhaps the hon. Gentleman has information that he has not shared with the rest of the House—or was he himself misled?

Mr. McAllion: Not only is this information that I have not shared with the House; it is information culled from the newspapers, which were reporting the CBI's opposition to the Bill long before it came to the House.
Conservative Members will always try to point to a consistency of purpose in the Government, which they will claim has led logically to this Bill. They will cite the launching of the "next steps" agencies initiative and to the Kemp report, which arose from that initiative and which recommended the privatisation. One hon. Member even described it as a bible for hon. Members. It has been asked —rightly—why Kemp's advice has been ignored. Kemp recommended that a state-owned company be created for a period of three to five years before privatisation.

Mr. Michael: Perhaps I may be of some assistance to my hon. Friend the Member for Dundee, East (Mr. McAllion) who has referred to the CBI. The hon. Member for Cannock and Burntwood (Mr. Howarth) appears to feel that the CBI was supportive of the principles of the Bill, but the CBI also called for
a statement that the Government will continue to provide support for exporters on terms at least comparable to those afforded to their international competitors, including that support provided in 'the national interest'".
That goes to the heart of our criticisms of the Bill.

Mr. McAllion: My hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) is right: it is that kind of support which is completely missing. This explains the united coalition in this country against the Bill arid the Government's proposals.
Kemp recommended that in the first stage there should be a state-owned company for at least three to five years before moving on to privatisation, and so far no convincing answer has come from the Government Benches to the questions raised by Opposition Members. We can, however, be certain that it has something to do with the Government's determination to rush the Bill through the House before the next election and before the people put them out of office and this Bill out of existence.
One of the key arguments has been the assertion that the requirements of the single market in 1992 will exclude state credit agencies from the insurance market. We are also told that increased competition within the single market requires a level playing field on which private sector insurance will not be placed at a disadvantage to public sector insurance. Both these arguments are no more than free market dogma, and an uninformed dogma at that.
First, there is no evidence whatsoever that the European Community is about to introduce, or even intends in the short to medium-term to introduce, legislation that would directly affect the operation of the ECGD. The Kemp report itself reached that conclusion. Hon. Members on the Government Benches have said that this development is inevitable, and one of them referred to a report in the Financial Times; but they are very selective when they refer to reports in the Financial Times. If they referred to a report on 10 January they would find that the Government line that private reinsurers would quickly step in to fill the gap was hotly disputed in the market place, where withdrawal of support was seen as unilateral export disarmament. That is what the Financial Times said recently, yet none of the hon. Members on the Government Benches have referred to that kind of argument.
In the absence of any substantial evidence to the contrary, the Government have a clear responsibility to explain why they are rushing this Bill through even before they know that there will be any such legislation or what form it may take. Those of us who are more cynical might suggest that not only is it expedient to rush the Bill through before a general election but that there is no better time than now to try and rush it through when the country's time and the attention is elsewhere and when the eyes of the media are diverted; there is no better time to slip through this unloved and shoddy measure in the hope that it will receive scant attention from anyone outside the House.
Let us take the question of the level playing field. Level for whom? Certainly not for British exporters who will be almost alone in having no kind of Government promotion for trade and exports compared with their European competitors and in having no public support for high-risk and politically difficult markets. Our exporters will thereby be weakened in comparison with exporters elsewhere in Europe. The Government justify this weakening of our exporters' position by reference to a level playing field and some imaginary state of capitalist perfection where we have a wholly free and unregulated market. It exists only in the minds of the No Turning Back group, but it is on the point of doing serious damage to our exports, to our balance of trade and to our national interest.
Another real cause for concern is the impact on ECGD itself and on its work force, who for more than 70 years have provided an invaluable service to exporters in this country. They have rightly been described as the world's most experienced credit insurers. They have given something like £250 billion in support to United Kingdom exporters, and they assist some 6,000 exporters every year. They have an insight into the problems facing exporters which is unrivalled and an expertise that underpins the export drives on which this country's future depends, and yet they are now to be subjected to break-up, privatisation and massive changes—changes unsolicited by them, about which they have not been consulted by Government and which I have no doubt they wholly oppose.
Earlier in the debate, an hon. Member said that this was a case of radicalism versus the status quo. There is radicalism and radicalism. There is the kind which is change for the worse and the kind which is change for the better. The radicalism advocated by hon. Members on the Government Benches is change for the worse, and that is why Opposition Members oppose the measure tonight. Perhaps in replying to the debate the Minister will tell us what support for the Bill exists among the experts in the ECGD themselves and how, if they had the vote, they would cast it at the end of the debate, for or against this particular measure.
What is certain is that the Government's proposals have met with almost universal hostility from those who represent the ECGD work force—the trade unions, who carried out a very successful lobby of the House today. They have raised a whole series of legitimate questions and worries with the Government to which they have so far had no satisfactory answers.
The Minister will know that the privatisation of the insurance services group will affect some 600 civil servants based not only in Cardiff but in the regional network. When it comes to redundancies, they want to know if at any stage there will be compulsory redundancies after the concern has been privatised. I understand that some in the


regional network have already been threatened with redundancy, even before the Bill came before the House tonight. Will the Minister give a commitment to investigate these allegations of redundancy threats in the regional network and report at least to the Committee, if not to the whole House, the outcome of those investigations?
I also want to know what guarantees the Minister will give that privatisation now will not mean compulsory redundancies for the work force at some future date.
There is also the question of the terms and conditions of workers in a privatised concern. In opening the debate the Minister referred to the TUPE regulations of 1981 which require the offer by the purchaser of an overall employment package which is no worse than the civil service's employment package. I think he used the term "broadly comparable". What do "broadly comparable" and "no worse" mean? They are open to interpretation. I suggest to the Minister that the employers and the Government are in a better position to interpret what these words mean than are the employees.
Moreover, what is not open to interpretation and what has been confirmed by the Minister earlier is that pensions will be excluded from the TUPE regulations: workers who have contributed throughout their lives to an index-linked pension scheme, who have paid for them, are to have that agreed scheme stolen from them by Government diktat. The Minister says that this is fair. What guarantees has he given? The statement made by the Minister at the opening of the debate was less than clear. Does he guarantee that exactly the same pension rights will be available to the workers after privatisation as before privatisation; exactly the same kind of index-linked pension scheme?
Will the Minister confirm for the benefit of the House that the TUPE regulations cover only the position on day one of the transfer, and that on day two the new employer will be free to make whatever changes he wants to the terms and conditions of employment of the workers he has taken over?
Will the Minister further confirm that the transfer from the civil service to the new company will continue to be on a voluntary basis or say whether there will be a shift to compulsion? I understand that it is voluntary at present, but if insufficient people are convinced about the new company will the Government conscript civil servants at ECGD into the new private sector company that replaces it? If they do so, will he confirm that those who transfer will have exactly the same rights relative to their civil service status as they have at the moment? The Minister said that he would secure existing rights to redundancy and so on, but what about future rights? Will they be guaranteed? Will rights in the privatised concern be the same as they were in the public sector? I hope that the Minister addresses those points in his reply to the debate.
Will the Minister consider why the CBI and the British Exporters Association have lobbied against the measure? A privatised insurance group will not provide credit and insurance in high risk markets, particularly where there is political instability. The ECGD works under a break-even requirement on a yearly basis, but after privatisation the position will change and it will be required to make a profit. There will be a new balance between profit and risk taking, and risk taking will be the loser. There will be less

risk taking after privatisation. Fewer exports will be assisted and fewer markets will be won. The national position of the United Kingdom will be weakened substantially.
Future options for export credits will be bleak. Either we will have a United Kingdom monopoly, most likely under trade indemnity, with higher premiums and reduced support, particularly in difficult markets, or there will be a foreign takeover, with British companies at a disadvantage, particularly in relation to companies from the home country of the foreign predator. That is a bleak prospect. We have already seen a reduction in support for trade fairs, the introduction of export charges and the withdrawal of cover from certain countries. In the case of a firm in my constituency recently, credit cover for Kenya was withdrawn. Now we have the creation of a so-called level playing field which will leave British exporters at a clear disadvantage.
In presenting the Bill, the Minister summed up by saying that its sole aim was to ensure the safeguarding of vital export services. It is precisely those services which would be put at risk by the Bill. For that incompetence and lack of understanding, the Government deserve to be put at risk. Their stupidity will play a significant part in ensuring that, when eventually they face the people, they will meet certain defeat.

Mr. Colin Shepherd: I am grateful to you, Madam Deputy Speaker, for calling me so early in this fascinating debate. I must follow the hon. Member for Dundee, East (Mr. McAllion) by declaring an interest. My interest is twofold—first, as director of a small to medium-sized manufacturing company which exports, and secondly, as a parliamentary adviser to a major firm of international contractors who have a distinct interest in the measure.
In principle, I have no great hang-ups about the part of the Bill relating to the privatisation of the insurance services group. From my personal experience, with my small company hat on, I have not had the greatest satisfaction in dealings with ECGD in the past. I have found it bureaucratic and slow. The hon. and learned Member for Montgomery (Mr. Carlile) put his finger on it when he referred to decisions where we found that the cost of market development in overseas countries, especially where there was a high finance risk, coupled with the cost of the premium and the price that we could get for the product, made the business unattractive. Therefore, we found ourselves inclined to leave aside those parts of the world where finance was difficult or where we would have to undertake excessive market development, with nobody else to do it for us. As a consequence, our exporting activities were inhibited. We did not achieve anything like as much of the export activity that we would all have liked. We felt it safer to do it the other way.
I entreat my right hon. and hon. Friends, when addressing the question of how to divest Government of the operation after the passage of the Bill, to make certain that there is strong and free competition. That is very important. The attitude change which will come about as a consequence of the Bill could be of enormous help to small and medium-sized manufacturing companies such as I am involved with. We have found after previous privatisations that once the change in structure has been


made, there are new dimensions of thought. The establishment of clear competitiveness between two or more suppliers could bring out new dimensions of thinking on export credits guarantee. I should like to see that sphere opened up.
I should like to address the remainder of my remarks to the serious business of project exporting industry. My hon. Friend, in opening the debate, remarked upon the welcome that had been received from those involved in exporting. That is not the uninhibited joy which has been expressed to me. In an article in the Financial Times on 15 January 1991, the world trade editor, Peter Montagnon said:
it has sparked deep worries among exporters that stiff terms for export credit insurance would make them uncompetitive on world markets.
The article underlines all the way through the representations that I have had. People have come back to me asking why, within the portfolio management system which is being put forward, we have got for project group business the most expensive premium rate structure of all the major exporting countries. I understand that this is ECGD's estimation of the position. I should like the Minister to confirm that to me in his reply, because it is fundamental that it should be appreciated.
My hon. Friend the Minister will surely realise that if that is the case, as I believe it is, it is putting United Kingdom exporters at a significant disadvantage and, indeed, diverting manufacturing activity away from this country. If it is felt that we do not provide the sort of assistance being provided by others, the major exporting companies in project business will look to overseas arrangements which will bypass this country. It worries me that that may happen.
France and Germany were mentioned by the hon. Member for Gateshead, East (Ms. Quin). The United Kingdom is pitching in the same marketplace, an incredibly competitive marketplace, in third-world countries. Both France and Germany charge lower premium rates. Significantly, in EC terms, neither France nor Germany publishes figures or accounts in the same way as we do. So, in effect, there is a hidden subsidy to the disadvantage of the United Kingdom. Looking at the drive towards Europeanisation, harmonisation and the political unity which is being urged upon us by France in particular, I cannot help but feel that such activity has to be ironed out of the system. We have to be careful that we do not go along with a situation in which France, Germany and others give more favourable rates, particularly as I gather that we are the most expensive.
If my hon. Friend's answer is a recognition of the premium position so far as the portfolio management system is concerned, perhaps he will tell the House why the Government are apparently deliberately withdrawing support for British exporters, in contrast with the very positive attitude of the French, and indeed the rest of the world, who are in there pitching for these third-world contracts that are so difficult to get? I read with great interest about the stone-walling that went on in another place a week ago by the Minister for Industry when he was challenged on this very point. I have no doubt that his brief said that he should not answer the question but I should be grateful if my hon. Friend would answer it tonight. One cannot help feeling that possibly the Government want to prevent United Kingdom project exporters from exporting

to third-world countries. I cannot believe that that is the case, but it is the impression that one is left with all the time.
I want to refer to the written answer given to my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) on 14 January. I must confess that I am glad that there has been a week's delay on this debate, which has given us time to digest things a bit. I note with interest that the Government are taking measures to press in international forums for other export credit agencies to charge more economic premium rates. The exporting industry, obviously, is not adverse to this. All it wants—we have heard this expression before—is a level playing field, and I can understand that. It does not want the Government to move at a pace which places the United Kingdom project exporting industry at a competitive disadvantage.
So, may we have some positive information from my hon. Friend in winding up tonight relating to the steps that he is taking? Which forums are we pressing? What is the timetable, the expected completion? The hon. Member for Dundee, East (Mr. McAllion) said that no one on the Government side had mentioned unilateral disarmament. He had the fortune to be slightly ahead of me rather than after me.
I have to remark that, while in another context the Government have not been strong advocates of unilateral disarmament, in the written answer of 14 January there is a clear statement that this is what we are about in this context. It is unilateral disarmament in that we are saying that we will seek a level playing field; we are unhappy with the premium rates that the other countries are charging so we will jack ours up to minimise the risk; we are sorry about the effect that it will have on all of them, but they will have to live with it. So can we have a little consistency by my party and my hon. Friends in terms of disarmament? I am a keen advocate of multilateral disarmament as far as arms are concerned, and I should like to be consistent.
Can we be told what timetable my hon. Friend envisages for achieving this level playing field, which will be welcomed by industry? Furthermore, what review mechanism does he have for assessing the consequences of this unilateralism in terms of business opportunity lost? If I am wrong and there is no business loss as a consequence, that is fine; that clears the ground; but we need some assurance that there is a mechanism for assessing it.
In his written answer my hon. Friend makes the point:
It is not the ECGD's policy to disclose details of the amount of cover available for individual markets; exporters should contact the ECGD to ascertain the cover position in respect of contracts they are currently processing."—[Official Report, 14 January 1991; Vol. 183, c. 359.]
That rang alarm bells with me. What speed of response does my hon. Friend expect when a project exporter with a possible bid in mind approaches ECGD to ascertain the possibility of cover? I am talking about the major project exporting business and it is an important point, since companies have to be able to work out their longer-term forward strategy and tendering is a long and expensive business. My hon. Friend will know that project exporting is difficult and tendering costs are high, while success rates are low. So each success has to bear the cost of all the failed bids.
Once a breakthrough has been achieved in a particular market, it is vital to be able to build on that success with follow-up orders. An over-restrictive application of


portfolio management system principles could mean no cover for those follow-up orders precisely because of that initial success—an unsustainably wasteful way of doing business.
We are talking in terms of a tender time of, first, three to 12 months to identify an opportunity, pursue it and pre-qualify to tender. It is an expensive process; it means a lot of money and a lot of work up front. it probably has to be pursued against the strategy that I have mentioned in respect of a particular country as well. We have a tender period of three months, followed by the adjudication and subsequent negotiation process before contract award, which takes six to 12 months, or even more. So we are talking about a time span of at least 12 months, and probably 24 months or even more, before a contract comes to fruition.
So could a company which established when it started the process that ECGD cover was okay for the country and available, therefore, in principle, and even that the amount involved was in the ball park, be told when it moved into the adjudication phase or the final negotiation phase that there was nothing left in the kitty, that a major contract had been given the previous week to another company in another business relating to that country and therefore its effort, time and money had been wasted? That is very important because it affects the confidence with which people attack the process of achieving export business in the project field in third-world countries.
I should like to ask my hon. Friend how the Government see the portfolio being constructed and developed. It is said in the release that this is really a matter for the ECGD to look after, but I think it is helpful to know how it will be structured. As I understand it—I shall be grateful to be corrected if I am wrong—the portfolio is spread on the basis of 25 per cent. being defence-related, 25 per cent. being aid-associated, roughly 25 per cent. being Airbus-related—very heavy—and 25 per cent. being routine commercial projects. Airbus and defence look like being locked in, which leaves the aid and commercial sectors open to squeeze, and there was a mention of the Treasury possibly seeking to exercise influence towards a zero option in terms of funding.
Both those points have important connotations, in the short term for employment and in the longer term for United Kingdom national interests abroad in terms of influence, future business and the whole long-term approach to things.
So I would like from my hon. Friend an assurance that there is a continued commitment to exporting industry working in third-world arenas and not making the combination of premium increases and market capacity restrictions so severe that United Kingdom exporters will be unable to compete and, as a consequence, will achieve little or no business.
Lastly, a practical potential result of getting the parameters of the portfolio management system wrong will be to encourage United Kingdom based project importers to look even more towards co-operation with overseas partners. I have mentioned this before. These joint operations result in a dilution of the use of British manufacturers. As a British manufacturer potentially engaged in supplying overseas contracts, I feel very strongly about this. It would be possible to paint a

scenario of penny wisdom and pound foolishness as we further risk our manufacturing base, engender unemployment and spend more on unemployment costs than we save on ECGD accounts. This is where the two budgets have to be brought together. Furthermore, we help our competitors, who may well be assisted to secure a foothold in markets which traditionally have been ours. The other point is the consequent effect on the balance of payments, which is important, and on employment.
I want an undertaking that the Government will closely scrutinise the operation of the portfolio management system and examine its trends and progress, that they will keep the door open to the United Kingdom project exporting industry so that it can be kept informed, and that they will respond to alarm signals with alacrity and flexibility when they are pointed out to them.
I should like to give a fair wind to the basic principles of the Bill. I have no hang-ups about its privatisation provisions, but there is tremendous responsibility on the Government in exercising their powers on the ECDG and the project exporting industry, which is not being offered to private ownership. It is a big responsibility.

Mr. Jim Cousins: I shall be brief; if that gives a flicker of anxiety to some, it will bring relief and rejoicing to many more.
I wish to follow the point that was made by the hon. Member for Leeds, North-West (Dr. Hampson), who is no longer present, in his plea for a long-term industrial strategy. Although his hopes are high, his prospects are rather limited. This matter has gone on for far too long. The Kemp report, which has been referred to almost ad nauseam, was issued at the end of a period of uncertainty about the Government's intentions for the Export Credits Guarantee Department.
The Kemp committee sat for a long time and thought carefully. Anyone who has had a quiet word with those who prepared the Kemp report will realise that their purpose was to come up with as low an order of madness as they could get away with to prevent the Government from coming up with as high an order of political madness as they could get away with if left to their own devices. That is not a satisfactory basis for the report.
After the report's proposals became known, there was a further period of uncertainty as we waited for the Government to clarify where they stood. As my hon. Friend the Member for Gateshead, East (Ms. Quin) properly and accurately said, there was a clear conflict of interest between the Department of Trade and Industry and the Treasury.
That period of uncertainty gave rise to additional difficulties. For example, in an attempt to structure or influence the Government's proposals, the ECGD began to modify its behaviour. It would be interesting to know from how many countries the offer of export credit guarantee help was withdrawn during that period of internal debate on how to respond to the Kemp report. I fear that, during that period, a massive effort was made to contain current expenditure—the source of the Government's concern—to satisfy the Treasury. That process has already damaged the prospects of British exporters, in some cases irreversibly.
It is interesting to note that the proposals of the Kemp report—to privatise the short-term services division of the


ECGD as a state-owned holding company—were taken up by the Government of France, who operate their export credit guarantee assistance through a state-owned holding company. It is instructive that, for the purposes of joint marketing, that state-owned holding company has linked with French domestic credit insurance companies. Inspired and encouraged by the French Government, it is setting up export promotion agencies throughout eastern Europe to ensure a substantial place in those markets for French exporters.
That shows how those structures can be used to promote exports and an industrial strategy. It is terribly disappointing that in all the hints, guesses and statements of the Government, there has been no sign not only of any proposals but of any suggestion that such matters were a matter of concern or interest. That must be profoundly depressing for many exporters who, in increasingly difficult economic circumstances, are attempting to serve this country by broadening the base of our exports.
That uncertainty affects not only the past but the future, because, although we are aware of the structure and form of the Government's proposals, we are still uncertain about their content. For example, we have no clear idea of how they will attempt to ensure that the spread of risks covered by the ECGD will be reflected in the new arrangements made for the state agency.

Mr. Tim Janman: The hon. Gentleman mentioned what the French are doing for short-term credit. They do not have a good record on using state aid, supposedly to help industry. In that context, one thinks of the motor industry, and Renault in particular. To what extent is he aware of whether the state-owned companies that have been set up are profitable and are not subsidised by the Government? If they are being subsidised, surely that would be in breach of article 92 of the treaty of Rome?

Mr. Cousins: I suspect that the French Government have chosen to operate in that way to cast a fog of decent obscurity on that matter. Hon. Members may regard that as a sign of duplicity, but they may also regard it as a sign of ingenuity. If ingenuity promotes exports and increases their base, it may be no bad thing. The changes that the French Government have made in their export credit guarantee system in the past five years have been much influenced by the rules of the European Community and, in substantial measure, are an attempt formally to comply with them while retaining the ability to launch active industrial strategies of their own. There is no doubt about that, but I do not know why that accusation is made against the French. If one were a member of the French Government, one might take considerable pride from it.
The Government have thrown no light on how and by what means they will attempt to ensure that we shall have the same ability to take advantage of the spread of risk that we have now. They have not said how they will try to control the risk premiums that will be offered. They have thrown no light on whether the prospects of the network of the nine regional offices, which were referred to by my hon. Friend the Member for Dundee, East (Mr. McAllion), will be secure under the new system.
The availability of a deeply embedded regional network of export credit guarantee offices for that small-scale but intense level of export activity is absolutely vital if smaller firms in the regions are to be drawn into the practice of

active exporting. We expect the Minister, if not tonight, later in the Bill's progress, to give us his thoughts on how the network of agencies can remain.
My hon. Friend the Member for Dundee, East was also right to cast doubt on whether the provisions for the transfer of undertakings in the Bill are meaningful. Those of us who are witnessing the true impact of changes in the national health service and the protection offered by the transfer of undertakings provisions are profoundly sceptical about the assurances provided in this Bill and whether they will prove meaningful.
Several hon. Members on both sides of the House have remarked that the Minister gave us no idea how he proposes to fill the black hole in his proposals. We are agreed, and the Government have been forced to concede, that even in their own proposals there remains a problem with the reinsurance of high political risks. The Government have said that, for three years, some means will be found to keep the reinsurance going. We have been given no details of that.
What will happen at the end of three years? Will there be a further period of transition and if so, on what basis? If not, how do the Government expect people to go over that cliff—because cliff it will be? The problem of political risk reinsurance will be an increasingly dominant feature of exporting to—one regrets—an increasing number of countries throughout the world. The Minister gave only a general assurance, which was not backed up by precise details. That is a matter of considerable regret.
There is a problem for the Government themselves. It would be a curious thing for the Government to privatise —if that is their word—the Export Credits Guarantee Department, lose control over the pattern and level of activities and be manoeuvred into passively picking up the tab for problems of political risk reinsurance. Again, the Government have provided no information to us and possibly no protection for themselves and their supposed aim of containing public expenditure.
The present position is disturbing. The economy is undoubtedly entering a period of recession. That point does not need to be laboured, because it is obvious to all. The insurance industry is less capable now than in the past of bearing some of the burdens which the Government propose that it should undertake. I draw the attention of the Minister to clause 3(3) of the Bill which contains the words:
The Secretary of State may not, in pursuance of such arrangements, enter into any transaction for the purpose of borrowing money but, subject to that, he is not precluded from entering into any transaction by reason of its involving borrowing.
The only conceivable meaning of that rather tortured language is that some of the Government's proposed arrangements in the new system will be extremely complex in insurance terms. Is this the right moment for the Government to hurl into the market many difficult and problematic transactions when it is clear that the British insurance industry is already shouldering a wide variety of difficulties and is much less robust than it has been for some time?
The Government's intention to bring export credit guarantees to the market is of little advantage to anyone if there is no market to be made. The Government must be somewhat cast down by the fact that many of those whom they hoped to interest in buying into the future of ECGD express much less interest now than previously. If the


Government wish to offer ECGD for sale in the market, they owe it to themselves and the people who work in ECGD to ensure that there is a market to be made. At present, no such assurance can be given.
I do not wish to echo the point made by the hon. Member for Hereford (Mr. Shepherd) about the problems in the projects assistance provided by ECGD. The points that he made were sound. We do not know the exact balance—to some degree we must rely on guesswork—but Airbus and defence account for over 50 per cent. of the work of the projects section of ECGD. One could question whether that is an appropriate emphasis for a Government agency. It will continue to be a Government agency which is seriously interested in broadening the basis of British exports.
It would be unfortunate if, at the end of this tortured and difficult business—it has already lasted far too long and created far too much uncertainty and the results seem far from clear to the Government—we ended up in the disgraceful position that the Government not only had no industrial strategy to underpin their work in export credit guarantees but relied excessively on their own involvement in reinsurance of political risks in an entirely passive way. That may not represent good value for money. Neither should the main occupation of the remaining Government export credit guarantee activity be the promotion and securing of the British arms export trade.

Mr. Steve Norris: It is always a pleasure to speak at the time when, as they say, the going gets tough and the tough go and have their dinner and leave those of us who are in thrall to the Whips to address the nation. [Laughter.] I do not know why that is a matter of amusement to my hon. Friends. It is a deeply serious point. We had hoped to have our dinner closer to 7 o'clock than 8 o'clock.
As it is fashionable to make declarations of interest, I should perhaps declare an interest as one of the few small business men in this place, and a one-time exporter. I have been had by almost every insurance company that exists. To that extent, I am distinctly susceptible to the quality of their service.
I have generally had a good experience in my dealings with ECGD. I have heard views to the contrary. One of my hon. Friends said that he found the service bureaucratic, but that was not my experience. It has always been straightforward, and its employees were knowledgeable and helpful. The acid test of the Bill and the proposal to denationalise ISG is that which my hon. Friend the Member for Teignbridge (Mr. Nicholls) set out.
In an excellent speech—I am sorry that the hon. Member for Cardiff, West (Mr. Morgan), who is looking slightly quizzical, did not hear it, because it was first class —my hon. Friend the Member for Teignbridge (Mr. Nicholls) suggested that the acid test was extremely simple. One had to ask oneself—[Interruption.] Are we sure who my hon. Friend the Member for Teignbridge is? We should look him up. May I continue, Madam Deputy Speaker?

Madam Deputy Speaker (Miss Betty Boothroyd): Please do.

Mr. Norris: We must ask whether the Bill helps or hinders exporters because, in all honesty, that is the acid test.
I do not know if I speak for all my hon. Friends but I suspect that I speak for the true intelligentsia, those of my hon. Friends who are present, when I say that I would not be in the slightest bit interested in a measure that was dogma purely for dogma's sake. The proposition in the Bill is an intensely practical response to a potential problem facing British industry. It saddens me that Opposition Members give a most extraordinary knee-jerk reaction whenever the word "denationalisation" or "privatisation" is mentioned, and in whatever context.
It may be a slight breach of confidentiality for me to tell the House about a conversation that I have every reason to believe took place between an Opposition home affairs spokesman on the privatisation of some prison services, a development to which I look forward. When I asked the Opposition's spokesman's attitude to that, I was given to understand—I think the hon. Member for Cardiff, South and Penarth (Mr. Michael) will be able to put two and two together and make five—that the Opposition spokesman's response was, "I gather that we are against it, although in all honesty I am not terribly sure why." If Opposition Members ask themselves whether they are sure that they understand why the knee has jerked so comprehensively against the idea that we should transfer the operation of the ISG to professionals who understand the business, they will find that there is no good reason whatever.

Mr. Michael: As I am sure you would point out fairly soon, Madam Deputy Speaker, the hon. Gentleman strayed into home affairs matters. I think that he reversed the quotation, because, as I understand it, the response was given by the Minister. That reflects the confusion among Government Members about many policies. I invite the hon. Gentleman to consider the minutes of the Committee currently discussing the Criminal Justice Bill, because he will then see that the knee-jerk reactions occur among Back-Bench Conservative members of the Committee.

Mr. Norris: I did not want to say this, because it is terribly unfair to do so, but I was referring to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who is not on the Committee. If I were an Opposition Member, I would question the right hon. Gentleman about the soundness of his opposition to privatisation. I have always given the right hon. Gentleman credit for considerable intelligence and I suspect that he, like many Opposition Members, privately knows that the idea that a service should be provided at arm's length by professionals, with proper supervision by the legislature, is inherently immensely sound. Conservative Members can be immensely proud of having promoted the idea so strongly during the past 10 years.
The Bill's purpose is to address the acid test of whether or not we can improve the service to exporters. I believe that we can, for concrete reasons. We should not still be debating the first one, which is whether the whole direction of the single market and single market legislation in Europe is towards the declaratory principle of article 92, which is, essentially, to outlaw state aid that distorts competition. It is absolutely clear that that is the nub of the single market. The whole point of the single market is to create conditions in which there are no artificial


boundaries to trade and competition among companies in all the European member countries. A cardinal principle of the single market is that Governments should not distort competition by artificial intervention.
I have heard the Opposition advance some most extraordinary arguments on that issue during today's debate. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), for whom I have great respect, uncharacteristically—there is no need for him to look round because I am referring to him and if he looks forward he will see that I can only be referring to him— advanced an extraordinary proposition. He suggested that what he describes as the complicity—his description, not mine—that underlines the French Government's approach to its subsidy of exports is a virtue, of which, on the quiet, we should approve. That is not only a dangerous proposition, but deeply questionable. The hon. Gentleman seems to be suggesting that the great spoils of this life should go to those who, in the single market, are most capable of undermining the whole purpose of the legislation. That strikes at the central purpose of the European Community.
I must say—it is directly relevant to the denationalisation of ISG—that, if there is occasional cynicism among Conservative Members about the direction in which the European Community is progressing, it is absolutely because over the past decade, the Government have shown a complete commitment to the implementation of the single market. We are further advanced towards the single market than any of our colleagues in Europe, and intend to see it completed. We wish to see it completed honestly and openly, because we believe that honesty and openness form the correct basis on which to conduct international trade.
It is utterly objectionable to suggest that we should adopt the attitude that, if we can evade the regulations, twist and turn them to our purpose and permit an underhand support of industry against the clear and wonderfully declaratory principles of our Community Ministers, whether French, Italian or whatever, it is desirable to do so.

Mr. Michael: Will the hon. Gentleman give way?

Mr. Norris: I was rather enjoying myself, but if I must, I shall give way.

Mr. Michael: It was clear that the hon. Gentleman was enjoying his own rhetoric, but he had left the subject of the Bill. Which pieces of legislation and regulation was he referring to?

Mr. Norris: I was so bound up in agreeing with the hon. Gentleman that that was wonderful rhetorical nonsense that I missed his question. Would he mind repeating it?

Mr. Michael: I am not surprised that the hon. Gentleman has to seek time to collect his thoughts, as have Ministers and other Back Benchers in the debate. Which piece of European regulation was he referring to?

Mr. Norris: I am sorry—I had given the hon. Gentleman credit for a more subtle intervention. I was simply referring to the principles of article 92. We have had a great discussion about the Kemp report as if it were some sort of bible-1 think that my hon. Friend the Member for Teignbridge described it as such—from which it was impossible to deviate. There is no difficulty in reading the

Kemp report and assimulating it into the position that the Government have adopted. It is quite clear that it is not necessary as of today to denationalise ISG—

Mr. Michael: rose—

Mr. Norris: I think that precisely my next point will satisfy the hon. Gentleman, so I hope that he will wait to hear it; if he is still not happy, he can then by all means intervene. As the Financial Times said in an article today, privatisation is much the cleanest approach to addressing the obvious question that will arise in future for French and other Governments in Europe—ensuring that there is a cast-iron mechanism to guarantee that state support to exports does not distort competition in contravention of what will then be established European legislation. That legislation will be so established because that is the whole drift of the European market, as underpinned by article 92.

Mr. Michael: The hon. Gentleman provides fresh confirmation that there is no such regulation. Perhaps he could now tell us how long ago article 92 was signed, as he seems to rely absolutely on it.

Mr. Norris: This is typical of the "angels on pinheads" nonsense that dogs the argument. In fact, the argument is extremely clear.

Mr. Janman: Will my hon. Friend give way?

Mr. Norris: The whole drift of European single market legislation is clearly towards a competition environment and the absence of state subsidy. If we and other European Governments—with some honourable exceptions—were to continue with the present arrangements, there is no question that, in due course, we should fall foul of the very clear competition regulations that are the very essence of the single market.
I am given to understand that the hon. Member for Cardiff, South and Penarth is a Front-Bench spokesman on these matters. That being the case, it really disturbs me that his party should be so confused as to the whole thrust of the European Community. That thrust is the creation of the single market. Indeed, I can think of few other virtues that the Community brings with it.
My hon. Friend the Member for Thurrock (Mr. Janman)—a fellow member of the "Essex mafia"—has been extremely patient. I give way to him.

Mr. Janman: I am very grateful to my hon. Friend for giving way eventually. After all, he invited me to make interventions. I am grateful also that he is a colleague from the very fine county of Essex.
My hon. Friend is right when he says that it is surprising that the hon. Member for Cardiff, South and Penarth (Mr. Michael) seems not only to be gleefully unaware of the existence of article 92, but also not to understand that we are talking about a measure that is very important to the insurance industry. He seems to be unaware of the fact that there have already been three European directives laying down the criteria relating to competition in the provision of insurance services across national boundaries. Some of those criteria gel with this Bill, in the sense that an organisation funded by the state would not be able to compete across national boundaries.

Mr. Norris: My hon. Friend makes an entirely fair point. Indeed, such is his grasp of these events, that he confirms his position as political commissar of the Essex


Members. It is a pleasure to have him alongside me. However, bearing in mind the way in which he thanked me in the introduction to his intervention, in future I shall be more wary about giving way to him.
I want now to move on to what seems to me to be a very important practical consideration, to which, it may be, too little attention has so far have been paid. More than half of the business of ISG is conducted with fellow members of the European Community. My understanding of the whole principle of credit insurance is that it provides cover against default on payments. Understandably, in the case of ISG, we are talking about business with fairly low margins. As the risk is fairly assessable and sensible, there is clear virtue in establishing two principles.
The first is that, in this context, there is absolutely no need for artificial subsidy. It is very questionable that a taxpayer would get fair value for money were the Government, by way of a state agency, to subsidise credit insurance within the European Community. The second principle is fairly straightforward. Business with low margins ought to be conducted in very large volume throughout the community. So far as Trade Indemnity and potential bidders for this company are concerned, I have no axe to grind.

Mr. Rhodri Morgan: Shame.

Mr. Norris: Indeed, it is a great shame. My hon. Friend gets a lot more by way of retainer than the hon. Member for Cardiff, West (Mr. Morgan) gets from his union.
As I have said, I have no axe whatever to grind. Subject to proper application of the rules on monopoly, my understanding is that we are not creating a monopoly.
What we shall have is a substantial professional organisation acting within the United Kingdom. It is clear that, by definition, we are entering a European market. The competition will be within Europe. Indeed, I can even see virtue in having in the United Kingdom a pretty substantial organisation capable of taking on the spread of risk and the volume of business that makes the underwriting of European community commercial risk justifiable. The idea that there is some sort of great monopoly scare in the prospect of tying the ISG to one of the existing credit insurers in the United Kingdom need not detain hon. Members, especially those on the Government side.
What is important is one of the other conditions attaching to the sale of ISG. This follows from a point that was discussed earlier. It would be utterly self-defeating if the bidder were to be a state-subsidised foreign company. Indeed, it would be intolerable if we were to have, for example, a part French-owned company actually determining the ability of British companies to export to France or, indeed, to any other country in the community. Clearly, under competition rules, the Secretary of State has already established that he will look very carefully at cases of acquisition by companies that are themselves part state-owned. I believe that that policy is entirely right and has widespread support on this side of the House. It is gratifying that the principle is embodied in this Bill.
One question remains, and it is one to which Opposition Members have quite rightly alluded. Other European countries will not necessarily change their regulations on the day on which this Bill becomes an Act.

It is quite obvious that, so far as British industry is concerned, if the profitability that is demanded by the sale involves a sudden and short reduction in the facilities that are available to exporters, the British exporters will be at a disadvantage. That is the point at which we would allow dogma to overtake common sense and the interests of our business community. That being the case, I am delighted at the willingness of the Government to provide a three-year reinsurance facility through the Export Credits Guarantee Department to allow a new company, in effect, to balance its portfolio.
To the Government, I make a plea that echoes one that has already been voiced today. We should not be too rigid about the size or, more important, about the duration of the insurance provision underpinning the new company. It is vital that we move to an entirely commercial market as soon as possible and that we do not, in the interim, put British exporters at a significant disadvantage. The way to match those two things is to make sure that the reinsurance facility is not simply closed-ended for three years but is capable of extension should the need arise.
The Financial Times article that has been mentioned is very supportive of the move to denationalise the ECGD. It says that top-up may be necessary. I echo that sentiment, and I hope that my hon. Friend the Minister will take it on board. The acid test is not dogma; it is the practical interests of British industry.

Mr. Cousins: In the closing part of his speech the hon. Gentleman has been saying some extremely interesting things. That comment is not meant as a reflection on the earlier part of his speech. His remark that he does not think that the reinsurance facility should be closed-ended represents some criticism of the Government. Does he think that it should be closed-ended as to resources?

Mr. Norris: I am glad that the hon. Gentleman has referred to that point. I made it for this simple reason. To the extent that it is necessary to move immediately to the commercial environment—that is to say, one in which the insured risk will show a profit—the new company will quite rightly wish to limit the facilities available, particularly as it will want to expand its book in certain markets as it develops experience. During that time, the provision of a reinsurance facility, effectively continually funded by ECGD, is entirely proper.
At the moment, the proposition is that that should be limited in operation and in time. My plea to the Under-Secretary—to which, were he not in avid discussions with practically every other hon. Member in the House, he would no doubt be sympathetic—is that that facility should be open-ended in terms of both scope and time. I do not think that the Under-Secretary heard me, but I shall leave it on the record for him to read in his bath tomorrow morning.
I shall now say something about projects group business. So far today, there has been no mention of the fact that the ECGD has a cash deficit with the consolidated fund of £2·5 billion, and I am given to understand that there are further claims of another £2·5 billion for the next few years. That puts me in mind of two cardinal principles. One was mentioned by my right hon. Friend—I am sorry, my hon. Friend—the Minister for Trade. I am sure that I merely anticipate the inevitable. From his commercial experience, he will know of that old golfing metaphor—one drives for show and putts for


dough. In other words, turnover is jolly useful, but nobody made a profit of turnover. One must show a profit on turnover.
In the present environment, I doubt whether the taxpayer can be happy that, so far, we have spent £5,000 million making goods in Britain and then giving them to other people at, essentially, £5,000 million less than we ought to have given them. I am a simple person, as no doubt my speech will confirm, but the introduction of the portfolio management system is a welcome development, as it will introduce some management control in a part of business that is otherwise in danger of getting out of hand.
It is right to have a system for pricing and controlling ECGD expenditure in relation to its support for project exports on medium and long-term credit, because that will allow the national interest reasons for supporting project exports. There is a good national interest reason, on occasion, properly to be weighed against the risk to the ECGD and the taxpayer that income from premiums and the ECGD reserves will not cover the underwriting losses that the ECGD may make on this type of insurance. Incidentally, it will ensure that the ECGD will continue to support United Kingdom capital and project goods exports, but at a greatly reduced cost to the taxpayer. That is an important criterion.
I am advised that it will also ensure that premium rates charged by the project group match the degree of risk more closely, which means that rates for high risk markets may rise. I face that prospect with equanimity, because rates in the lower risk markets will fall, and that must be good news.
If we do not press for other export credit agencies to charge more economic premium rates—something to which I hope the Government will pay attention—it will be pointless to be in a virtuous or a vicious circle by which everybody is subsidising business to pass goods around the world at prices that are inherently unrealistic.
The best way of all in which the Government could assist exporters is by a simple mechanism that would have the virtue not only of making exports more attractive, but of making them easier to fund—that is, to reduce the domestic interest rate. That might even drive down the value of the pound and make imports dearer. That is how I see it, as a simple soul, but I am told that this is a highly unsophisticated analysis, so I leave it on the table. I hope that my right hon. and hon. Friends in the Department of Trade and Industry will see the wisdom of that policy, so that those of us in the small business section will have a tiny modicum of relief.
This is a forward-looking Bill, which shows that Britain is determined to be the leader in the single market. It is in stark contrast to the policies of some of our European counterparts but, more particularly, it is in stark contrast to the views of the Opposition. We intend to make the single market work for the benefit of all European citizens. I have no hesitation in commending the Bill to the House.

Mr. Geoffrey Robinson: I have no specific interest to declare about any company with which I am involved, but I declare a general interest in the well-being of the whole British manufacturing industry, for which the services that we are discussing should be continued. I agree with the hon. Member for Epping Forest (Mr. Norris). There is a huge divide between

Opposition Members, who believe that the ECGD, in all its activities, has an important and at times vital role to play in the support of British manufacturing, and Conservative Members who, in their blind pursuit of the quixotic folly of the single market, do not mind what damage they inflict on British manufacturing, so long as they can say that they are unilaterally conducting this policy of industrial disarmament.
It is no good saying, as the hon. Member for Epping Forest said, that the French, the Germans and the Japanese have their own ways of promoting their exports—in the latter case, for many years and perhaps even now, they prevented imports as well—but we shall have none of that, so translucent is our purity, so overriding is our determination, whatever the cost to British consumers and producers, to implement the single market with all that that involves.
Governments of both parties do silly things from time to time, but I should have thought that this silly, tatty, messy Bill would have been dropped following the change in regime a little while ago. Unfortunately, we have had a continuation of policy under three Secretaries of State for Trade and Industry. The privatisation measures in the Bill result not just from silly dogma but from the determination of the Treasury, which now emerges triumphant from the long guerrilla campaign that it has waged against an outstanding Department of Government. As many hon. Members on both sides of the House have done, I pay tribute to the competence and professionalism of those in the ECGD with whom I have had occasion to work.
It is no argument—indeed, it is a slight—for Conservative Members to say that, by privatising this service, we shall put it in the hands of the professionals. It is in the hands of the professionals. It is in the hands of a group of people who have done the job for many years and who have always had as an overriding objective, the promotion of British exports and the interests of British manufacturing industry.
Will the Under-Secretary look into a case for me? It concerns GEC-Plessey Telecommunications in my constituency, which has secured a most important contract with the Government of Kenya for £23 million-worth of exports of telecommunications equipment. I understand from the group's director that cover for Kenya has been removed. This affects the project group, which is based here in London. Will the Minister reconsider that decision and recognise that, after we lost many jobs in Coventry last year in this sector, we do not want unnecessarily to face the same problem this year?

Mr. Gerald Howarth: Has GEC considered taking the risk on its own books?

Mr. Robinson: That not the issue today. Manufacturing companies are able to avail themselves of services which have been in place for many years; they have done a good job by British industry. In this debate we are discussing the dismantling of one of those services and the prospective rundown of other services. We are dealing today not just with the insurance services group, which is the first step. Who believes that the Treasury does not have its sights relentlessly set on project support? Clearly it must do so, and that is what the long-term argument is about. It is about efforts by the Treasury to get out of this whole


area of support for British manufacturing. This issue is not whether the company should take on this role. The issue today is why the Government are not doing so.

Mr. Gerald Howarth: In other words, the hon. Gentleman is saying that the whole commercial insurance experience in ECGD, which he rightly says has experts working for it and which has been in business for a long time, has come to the conclusion that this is a risk which can no longer be underwritten. In effect, the hon. Gentleman is saying that, despite the fact that they will not be able to pay the money, GEC should be able to export this, with all the consequences for jobs in his constituency and elsewhere in the country, and that the taxpayer should pay for it. Why should not the taxpayer just give the money straight to GEC?

Mr. Robinson: I am not saying that at all. There is always a question of judgment in these matters. That must be clear even to the hon. Gentleman In this life, things are not black or white. If the hon. Gentleman really believes that, he cannot have been in the House long. There is a difference in the Government. I am sure that the pressure here, as always, is coming from the Treasury, which takes an extremely hard line. The Treasury's sole concern is always to limit Government expenditure, while the Department of Trade and Industry is pushing the manufacturers' case and the case of British industry, and I believe that it would be supported in that attitude by the project group. I ask the Department and the Minister of State to take a particularly close look at this aspect.
It would be strange indeed to see such a Bill as this being pushed through in any other country. At a time when we were withdrawing subsidies right across British manufacturing industry, France, Italy, Germany and Japan were continuing in various ways to back their industries. I do not condone what they have done, and I do not particularly say that it is wrong.
When the Government say that they will have none of that and that all we are interested in is the 1992 position, one must ask whether they have ever been in manufacturing industry. Do they not know what the score is when one gets into contract negotiation? Do they not realise how important it is in many big projects, and indeed within and outside Europe, to have the Government with and behind one's industry?
All we are asking for on behalf of British manufacturing industry is a level playing field, but we cannot level the playing field at our end and fall off the edge at the other end. That makes no sense to anyone in British manufactory industry. We want a level playing field and on that basis we can compete with anybody, but there have to be reciprocal measures and actions for achieving that. We cannot have the British Government seeking to prejudice the interests of British industry.
This Bill is ill thought out. We do not know who will buy this proposal. It would be absurd to sell it to the Dutch national company, and equally absurd to create a monopoly by selling it to Trade Indemnity in the United Kingdom. I do not believe that Sun Alliance could possibly undertake to do anything like the job on the scale and on the terms that we need.
We need from the Government a total rethink of this mess to avoid getting themselves into a position in which

they have no buyer or the cover suddenly dries up. Even Conservative Members have said that there must be an open-ended guarantee for the supply of that reinsurance finance—an unconditional guarantee in terms both of the volume and of the conditions on which it is available. What sort of incoherent, self-contradictory nonsense is that?
There is only one thing to do today. The most appropriate course is for the Government to withdraw the legislation, to go back to proper funding and support for ECGD as a separate independent corporation, funded by but separate from Government, in the way the French and others operate. But we cannot have this continued penalisation of British interests in the interests of a greater, quixotic monument which the Government are so anxious to build on the ruins of British industry which they are creating.

Mr. Tam Dalyell: On a point of order, Mr. Deputy Speaker. On behalf of a number of my colleagues, I make a formal request that the Government consider making a statement at 10 o'clock, or as soon as is convenient thereafter, about the attack on Tel Aviv tonight, about the tragic loss of another Tornado, and about the oilwells ablaze—a matter that was raised at 3.30 pm. Could that request be conveyed to the House authorities?

Mr. Deputy Speaker (Sir Paul Dean): I have had no request for a statement, but I am sure that the Treasury Bench has heard the point made by the hon. Gentleman.

Mr. Martin M. Brandon-Bravo: Having heard the opening remarks by the hon. Member for Gateshead, East (Ms. Quin) who led for Labour this afternoon, and the comments of her hon. Friends, particularly the hon. Members for Warrington, North (Mr. Hoyle) and for Dundee, East (Mr. McAllion), I make the point that ideologically they are just as committed to nationalisation and state control as I am committed to and believe in precisely the opposite approach.
I make no apology for the fact that I am a totally unrepentant denationaliser. My hon. Friend the Member for Epping Forest (Mr. Norris), who has gone to his well-earned supper, made a most delightful speech of serious content which was delivered in a way that only he could do. But throughout his speech he also used the word "denationalisation", and rightly so. I am not quite sure why we stopped using that word in favour of the word "privatisation", which seems to have all sorts of connotations in the public mind which confuse and diminish public support for the concept that industrial and commercial undertakings are better run and managed in the private sector than in the public sector. As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said earlier—and it was not a criticism of this place or of hon. Members but a statement of simple fact—this House, which contains very able hon. Members but largely the wrong people, is the wrong venue to dabble in the day-to-day affairs of commerce and industry.
We who are honoured to be here are primarily the guardians of the public interests. I believe that we can best do that if we are at arm's length from the various enterprises and if we ensure that they work within a


framework of minimum regulation to ensure and protect the public interest. That is our true role rather than the running of trade and industry.
I welcome the Export and Investment Guarantees Bill as yet another step in denationalisation, even if the Government in their wisdom have felt able to float the Insurance Services Group as part of the present Export Credits Guarantee Department. If the Government feel at this stage that the wider public interest is best served by retaining public control of what is currently called the project group based in London, then for the moment I am content.
Who would buy the massive losses and predicted losses that were referred to by my hon. Friend the Member for Epping Forest? Judging by the fact that ECGD may not support exports to the Community and that those exports are currently about half the total activities, it seems to me that a review of its format is called for, and certainly it is right that it should become two separate enterprises. If ISG covers short-term credit, surely it fits the normality of private insurance cover rather than the involvement of the state and the Exchequer. Its activities at present are not loss-making, so I presume that it has nothing to fear from the normal commercial pressures of competition.
I do not like to hear of the deficit on the business that will stay in the public sector, but clearly it is the kind of business that could not be won by exporters without it. If its continued funding is in the public interest, at least for the time being, until we see how Europe and the rest of the world moves, I am content that that part stays in the public sector.
All of us, as was said earlier, have heard of projects lost to other countries because the financial arrangements were not as good as those on offer by our competitors. I hope that, when my hon. Friend the Minister replies, he will say something about that. My instinct is that insurance services, like so many other areas of commercial endeavour, are likely to respond much more readily and effectively in the private sector under the increasing European rules. Unless denationalised, my understanding is that insurance services would be functioning, as my hon. Friend said when he opened the debate, with one arm tied behind their backs. We must anticipate 1992 and make the necessary changes.
This is not the only example of where in the European context we must get out of the public and into the private sector soon. Hon. Members will recall that last week the British Technology Group had an excellent display in the Upper Lobby. That organisation too is finding itself constrained and is worried about the new format in Europe after 1992. I hope that it will not be long before we debate on the Floor of the House the setting free of that enterprise.
I have been a member of the Committee considering one other denationalisation Bill, when the one legitimate concern expressed by hon. Members on both sides, not just the trade union sponsored Members, was for the protection of the staff involved. I understand that clear undertakings have been given that transfer to the privatised company will be voluntary and that the staff who transfer will be given terms and conditions at least as good as those that they currently enjoy. I also understand that, where that is not possible, those terms and conditions that cannot be transferred will be replicated. I do not

believe that the Government could be clearer than that, and I hope that my hon. Friend the Minister will confirm that that is the Government's intention.

Dr. John Marek: I do not think that what the hon. Gentleman says is true. The staff terms and conditions will not be protected—especially the pensions. Perhaps, through the hon. Gentleman, I can ask the Minister to confirm that. However, I think that there is a serious question about it.

Mr. Brandon-Bravo: The reading that I undertook before the debate suggests that that is the case, but if that is not so, I hope that my hon. Friend the Minister will clear that up when he replies.
The hon. and learned Member for Montgomery (Mr. Carlile) said that, if rates were not competitive, British industry would go elsewhere to other companies in the United Kingdom or to finance and insurance companies in Europe. So they should. The hon. Member for Coventry, North-West (Mr. Robinson) has experience of industry and I am sure that he would agree that industry jolly well should go where it can get the best deal. What I hope will come out of the Bill is that there will be one other means whereby British manufacturing companies can find a British company that will give them the best deal in Europe. But it is no part of the Government's role to set a scene that virtually makes that impossible, driving companies abroad for their insurance cover, which is what would happen if we did not set up a framework in the United Kingdom to ensure a competitive scene.
If the short-term business underwritten by insurance services is no different from much of business currently being dealt with by private sector insurers, and if the project group is to be allowed to continue with Government funding, to handle under the state umbrella those risks that cannot be covered by or are unacceptable in the private sector, we are approaching the matter in the right way, denationalising that which can be denationalised and retaining in the public sector that which cannot.
This is an enabling measure. No date is set for any flotation. I echo the comments by my hon. Friend the Member for Leeds, North-West (Dr. Hampson). I support the Bill but I express some caution. We should not move at a pace which puts any United Kingdom company at a disadvantage compared with any European competitors.

Mr. Rhodri Morgan: I speak tonight as the Member for Cardiff, West, not in my capacity as a n Opposition spokesman on energy. The ECGD insurance services group is located in the adjoining constituency of Cardiff, Central with the computer centre in the other adjoining constituency of Cardiff, North. Many of my constituents are among the 800 or so people who work for ECGD in the Cardiff area. Therefore, I feel particularly strong empathy with the battle against this rash, hurried and premature measure.
All hon. Members seem to be agreed tonight that, if the measure is prompted by free market dogma, it is wrong, and if our opposition to it is based on Stalinist dogma, that is also wrong. Hon. Members on both sides of the House have managed to skate for at least five minutes on the thin ice in the belief that dogma is wrong and common sense is


right. I shall try to examine whether the measure is activated by dogma or whether it has a backbone of rationality and common sense.
The Bill has two main purposes. One is to continue with the existing work of the ECGD, providing the Secretary of State with the powers to do that, and the second is to facilitate the privatisation of the insurance business of the ECGD. I am not a great fan of Anglo-Saxon proverbs, but that could be called trying to have one's cake and burn it.
The Bill seems to have been prompted not so much by the needs of industry, the EC or 1992, but simply by the weirdo views of the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the previous Secretary of State for Trade and Industry who, to use a football field analogy, believed that one should equalise before the other team scored. It is true that some day the EC, in particular, via Sir Leon Brittan, a former Member of the House and the vice-president of the EC in charge of competition matters, might bring in a proposal which will then have to be negotiated with the 12 Governments to produce a level playing field in the area of export credit insurance free of subsidy, or at least the possibility of subsidy implied by the taxpayer backing for it, to cover internal trade after 1992.
There is no sign of this on the horizon yet. No one is hurrying except this Government. That causes us to ask why it was necessary for the right hon. Member for Cirencester and Tewkesbury to leap in with the measure when he did, in advance of all the other countries which had not made any moves in the same direction. Is that the best way to play the Euro game? That is the question we must ask ourselves when we apply the test of dogma or common sense to this measure.

Mr. Janman: I remind the hon. Member that his own party often criticises us, albeit quite wrongly, for dragging our feet in the European Community, particularly in relation to implementing directives from the Community about the single market. The hon. Member will be aware that Brussels is taking a very keen look at the subsidies that are implicit in the way in which countries in the Community handle their export credit policies. Surely it is absolutely right and proper that this Government should take a lead in what, inevitably, everyone else will have to follow.

Mr. Morgan: The hon. Member has touched on the correct point, but he is interpreting it quite wrongly. How is the Euro game best played in the interests of United Kingdom plc? That is what we are asking. That is something this measure plainly does not do. All the justifications that have been given by the hon. Member for Oxford, East (Mr. Smith) who has now gone to his much delayed and very much deserved dinner, the hon. Member for Nottingham, South (Mr. Brandon-Bravo) and the hon. Member for Thurrock (Mr. Janman), by way of intervention, simply display the fact that they do not understand how legislation is shaped at the European level in an attempt to produce, post-1992, the much desired level playing field.
Let me tell the House what actually happens when the European Community shapes legislation to bring in the level playing field. The European Community is attempting to blend 12 entirely different systems—perhaps it is not as many as that; the Benelux countries, Spain and

Portugal may have similar systems. Nevertheless, it is trying to blend at least half a dozen entirely different systems. This does not mean that, on day one of 1992, everything that existed before that could possibly constitute an intervention in the free passage of goods, services and labour across community frontiers must be abolished.
That is not the way the European Community operates; it never does things like that. It will recognise that, in Britain, we have a system which has existed for 70-odd years, and 90 years in domestic credit through trade indemnity. France has a different system; Germany has a different system again, and so on. How can all these systems be blended into a sensible compromise that does not favour any one country? If the Government are really interested in the well-being of this country, the last thing they will do is lay all their best cards on the table before any of the other countries in the Community have started to show any of their bargaining chips. Before the other countries in the Community even start to mould the legislation into the shape that suits them best, we have already shown our best hand.
In effect, the Government are saying that United Kingdom plc can swim in shark-infested waters without any water wings or assistance or any swimming lessons at all. If it cannot swim, then it probably does not deserve to be in business anyway. That is a reasonable summary of the attitude of the right hon. Member for Cirencester and Tewkesbury. He is effectively saying, "If I am not good enough to be Secretary of State for Trade and Industry, then British industry is not good enough to be looked after by me. It can either sink or swim, and if it cannot swim, it is probably a good thing it is out of the water instead of cluttering it up for everyone else."
It is the same sort of attitude that we saw in the steel industry in 1980 when the Davignon crisis plan came in. Britain dived in straight away before any of the other countries. When Davignon said that we must lose 25 per cent. of our steel industry we closed plants even before we started bargaining. Then the other European Community countries caught up very slowly—the French Government did so in 1985; the Germans started in 1987 and the Italians waited until 1989. But we did it in 1980—no problem. This Government thought it was a good idea to apply the cold shower treatment and get rid of the so called weaker brethren, remove the fat and the surplus.
That is what we mean by dogma. That is what we mean by not adopting a common sense and rational attitude. It is the Government's job to look after United Kingdom plc. It is the French Government's job to look after France plc and the German Government's job to look after Germany plc. If this Government does not look after United Kingdom plc then the French Government certainly will not do so. I am afraid that that is the nature of the failure of the British political establishment in this House and in particular in the Government party to understand how to play the Euro game in order to give United Kingdom plc a reasonable chance of competing on fair and equal terms in 1992. That is one of the reasons why we have a trade deficit of extraordinary proportions with our fellow trading partners in the European Community which bodes ill indeed for the onset in 11 months' time of the European single market.
Tonight we are looking at two aspects of the Export Credit Guarantees Department. The first is projects, which is admittedly a subsidy racket. There are no two ways


about that and we all agree that this is so. It is a very difficult position to get out of and the Government have accepted that by not attempting to privatise the projects group—the long-term credit insurance for defence equipment, power stations, chemical plants and all the usual stuff that we have sold abroad to third-world countries and eastern Europe over the years. It is a bit of a racket. There is very heavy and competitive subsidisation of the export terms. The Government do not have a solution to that question and I do not have one either. I accept that it is a racket. Multilateral disarmament must take place over the years which may affect the work of the projects group, but the Government accept that they do not know how to get around the problem.
Basically, this Bill applies to the unsubsidised part. It is a mutual reinsurance facility in many ways which has been in existence in respect of the OECD and the EC level export credit insurances, and it is unsubsidised. It involves a facility that is available from the taxpayer, but it is obliged to abide by the principle that it must not be subsidised. It must wash its own face, taking good years with bad. It is very similar to trade indemnity in this country through the backing of the big insurance companies.
On the projects side, we are not talking about the removal of subsidy. I do not know whether the EC wants to go in for the kind of penny-in-the-slot, laissez-faire philosophising that we have heard from many of the Back Benchers who have supported this matter tonight. It is not a matter of saying that we should eliminate subsidies because that is the basic principle of the Community; it is merely a question of whether something should be done in the public sector or the private sector.
The hon. Member for Nottingham, South said that he preferred the word "denationalisation" to the word "privatisation". Tonight we are looking at all the options whereby we can denationalise something without privatising it. In other words, are there any methods by which one can bring in private capital so that ownership is not transferred to the private sector but the public sector borrowing requirement problem is removed? In other words, one has a state-owned plc, either with or without private capital. These are all matters of detail which could act as forms of export credit which are guaranteed to work without finding a bidder who will actually purchase the company and place it in the private sector.

Mr. Brandon-Bravo: It is not just the effect on the public sector borrowing requirement or arguments about 51 per cent. or 49 per cent. It is the fact that, when politicians, whether in this place or at local level, have control of something, they feel that they have to meddle. They are the wrong people to meddle. It should be left to those who are running the business.

Mr. Morgan: The hon. Gentleman offers one of the best examples of penny-in-the-slot, laissez-faire theorising that I have ever heard. If that is not dogma, I do not know what is. The hon. Gentleman suggests that the ECGD cannot make sensible commercial decisions while in the public sector. Only among the free traders on the Back Benches and Front Benches of the modern Conservative party is there to be found dogmatic assertions of that kind without any facts to back them up. That allegation has never been made during ECGD's 70 years of existence, and the ISG has never needed a subsidy.
It is hoped that the group will be kept together when it is sold to a private purchaser. However, one must remember the management pyramid, chain of command and age spread that currently exists in the ISG. Many of those currently responsible for taking the key decisions that can equally well be effected in both the public and private sector are people in their forties, who may have worked in the civil service for 25 years, first in London and then in Cardiff, and who will have a large pension entitlement.
If one asks someone who has spent all their working life in the ECGD, man and boy, woman and girl, whether they want to transfer to Trade Indemnity, Sun Alliance, Barclays, Nederlandsche Credietverzeuring Maatschappij, or whoever purchases it, or would prefer to spend the next 10 years still employed in the civil service or take early retirement, a large proportion will prefer to move to another Department rather than take their chances with a private employer. At 47 years of age, or whatever, their pension entitlement is important to them.
That stark choice will confront many people in senior management positions in the ECGD. The pension entitlement which has accumulated for many of them is bound to be a major factor in deciding whether to join the private purchasers' own pension scheme and sacrifice a civil service pension, or to take a job elsewhere in the service.
I take a close interest in anything affecting the ISG's headquarters in Cathays park in Cardiff, not least because I worked as a civil servant in the same building for five years and was involved in the negotiations that brought the group to Cardiff in 1975–76, when I was the industrial development officer for south Glamorgan. In the mid-1970s, we made a major attempt to attract to Cardiff Government Departments that were moving out of London. Companies house moved in 1974, and the business statistics office moved to Newport in 1975. The ECGD itself moved to Cardiff in 1976. In the private sector, the Automobile Association's insurance division moved from Basingstoke, and the Chemical bank of New York relocated to Cardiff in 1981. Over a five-year period, a critical mass was achieved in financial services in the Cardiff area, so that it now offers a choice of jobs in both the public and private sector that would be attractive to existing ISG employees.
When the group is privatised, its main building will be in breach of its covenant with the Marquis of Bute, which specifies that all buildings in Cathays park must remain in public sector use as universities, local offices, Government Departments, and so on. On privatisation, the group will be without a home. One can understand the concern felt by the ISG's 750 employees, because the Government are placing their jobs on the block by transferring the group to a new owner and leaving it without a headquarters. I understand that the Marquis of Bute's legatees have promised to be reasonable and will not insist from day one of privatisation that the group will have to move out of Cathays park, but then it will be down to rather one-sided negotiation with Cardiff property developers if the company is to find a new home. If the negotiations turn sticky, there may be cause to worry about the future employment of those concerned, who may be forced to move from the area that has been their home since 1976.
I appeal to the Government to be as non-dogmatic as it is within their philosophical capabilities to be. They may find good reason for abandoning the Bill. They do not


have to stick to it for the sake of the memory of the right hon. Member for Cirencester and Tewkesbury, never mind scoring brownie points with the Adam Smith Institute. Instead, they should look after their 750 civil servants in Cardiff, and look after UK plc.

Mr. Tim Janman: I shall be as brief as possible, so that my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) may have an opportunity to contribute to the debate. I confess that I am standing here tonight partly because of the arm-twisting of my Whip a few hours ago, when he approached me about speaking in this debate.
The hon. Member for Cardiff, West (Mr. Morgan) is on firmer ground when he asks my hon. Friend the Minister to address the practical questions and the difficulties that must be overcome in physically moving the group out of its existing offices in Cardiff and transferring the business to a new owner, than when he spoke of Labour's interventionist, nationalising philosophy of the 1960s and 1970s.
The Bill is a small but precise step forward in the programme of rolling back state control—and a very welcome step it is. I hope that it gives a clear message to both Labour and the British people—that, even though there has been a change of leadership in our party, there has been no diminution or watering down of our clear intention to continue implementing the Conservative principle of denationalisation for the future health of our people and economy.
Tonight, we have heard a lot about the ECGD's deficit, although I believe that most of it is within the projects group and not the ISG. However, I wish to dwell upon ISG and its denationalisation. Within the European Community, it is illegal to subsidise exports from one member state to another. Given that 50 per cent. of the ISG's work is within the Community, and that it is part of an organisation which is clearly used to subsidise exports, it is quite evident that action has to be taken. The keenest and most appropriate method is to transfer the ISG into the private sector, which is what the Bill seeks to do. It also seeks to improve the cost-effectiveness of the projects group, as some of my hon. Friends have mentioned.
Within the next few years, the European insurance marketplace will be in a considerable state of flux, and the Bill gives the ISG the commercial flexibility required to operate within that marketplace. Bureaucratic sloth, which is inevitable in any nationalised operation, will be replaced by competitiveness and commercial awareness. Denationalisation of ISG will inevitably give that edge to its entire operation. The Bill carries out the fundamental recommendations of the Kemp report, which is an objective and non-doctrinaire assessment of the requirements.
As my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) said, denationalisation is a better way to describe what we are doing than privatisation, and I shall summarise the main reasons why I think that it is important for us to proceed with it.
There will be increased competition in the credit insurance marketplace within the European Community. The marketplace will be framed by national law and by

directives from the European Commission, which will preclude state-subsidised or state-owned companies from having access to markets in other member states. Therefore, the first reason is that the commercial environment is changing, due to our membership of the European Community and to the single market, and the Bill reflects that changing environment and will allow ISG to compete within it.
I must tell the hon. Member for Cardiff, West that, although there may be practical problems because of the changes, it is far better to have those problems than to lose large numbers of jobs in Cardiff because the ISG in its present state would not be able to gain access to the European marketplace as a result of those changes.
A private company, rather than a publicly owned body, will be able to refine its product range, and will have more commercial freedom. For example, it may want to combine domestic and export credit insurance, without subsidy from the taxpayer. In other words, the products that it offers the marketplace within which it will have to operate will be far more commercially competitive.
ISG will need to be non-subsidised if it is to be effective within the European Community, and the services that it offers must be competitive. The continuation of state subsidy would hamper ISG in the modern European marketplace. Increasingly, multinationals will want one-stop shopping when buying insurance in the European Community, and the Bill will enable the ISG to diversify the services that it offers multinational operators within the Community. The ISG will not be able to do that if this change is not made.
Continual state backing is probably illegal, as I said earlier in an intervention during the speech of my hon. Friend the Member for Epping Forest (Mr. Norris), whether it is overt state control, as in Britain today, or the more covert arrangements developed in France, which the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) mentioned. Whether they are overt now, or covert during the next few years, such arrangements are illegal under article 92 of the treaty of Rome. Given the Opposition's uproar when there was that little controversy last year about the sale of Rover—the Opposition were very annoyed then about the use of injudicious state subsidy in Britain in the motor industry—it is interesting that Opposition Members now defend French actions in this part of the insurance industry.
Another good reason for denationalising ISG is that it is absolutely right to free it from the interference of politicians and civil servants. Given his experience in the civil service and the world at large, I am surprised that the hon. Member for Cardiff, West has not observed that there is an overwhelming temptation for bureaucrats, civil servants and politicians to meddle when they have the opportunity. The best way to prevent that is to ensure that the service is offered by the commercial world, under private ownership.
I believe that the Bill will enable the ISG to provide a better service for exporters, especially small firms. I welcome the mechanism whereby the ISG will be transferred to the private sector—competitive tender—and also the criteria to be applied to that mechanism. Let me say in conclusion—for I know that my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) wishes to speak—that the Bill is good for the ISG; good for the employees, as it will be far more likely to guarantee employment than the present system; good for exporters;


and good for the taxpayer. It is, however, bad for the Labour party, which is still wedded to the philosophies of the interventionist 1960s and 1970s, which tonight's debate has exposed for what they are.

Mr. Alun Michael: The repetition by the hon. Member for Thurrock (Mr. Janman) of the word "good" does not make good a had piece of legislation.
This has been an interesting debate, in which a number of constructive speeches from both sides of the House have exposed the weakness of the Government's case. The Opposition have maintained from the outset that the Bill is dogmatic and pointless. It will weaken the Government's support for private enterprise and do yet more damage to the export trade that is so important to Britain's economic future. Today's debate has shown that we are right. The Minister should listen to the voices of his hon. Friends as well as those of Opposition Members, and withdraw the Bill.
Our plea is simple—protect exports. The Cardiff and ISG operations are not merely a concentration of staff—which my hon. Friend the Member for Cardiff, West (Mr. Morgan) and I value, because we see it operating in our city and our constituencies, and especially in the constituency of the Trappist hon. Member for Cardiff, Central (Mr. Grist). This is a concentration of staff with expertise, whose work has won respect and who have given tremendous support to manufacturers throughout the United Kingdom.
I accuse the Government of a lack of pride in the achievements of an important public enterprise—a lack of pride in the contribution made by an arm of Government in helping the private sector, and small businesses in particular. The Government, indeed, show a certain lack of patriotism, allied to the lack of understanding of Europe that is patent in their approach.
Perhaps we should not be too surprised when we consider where the Bill started its life. Its birthplace was the Department of Trade and Industry, where the inner policy-making sanctums were presided over by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley). South Wales Members—including my hon. Friend the Member for Cardiff, West and myself—were appalled when the decision leaked out in a written answer. Some of us went to see the right hon. Member for Cirencester and Tewkesbury, and asked him why he was taking such action. He replied, "Well, we may be forced to do it anyway." We asked, "What action by the European Commission forces the panic?" The response was a toss of the head; we received no answer.
We pointed out that, in his previous post at the Department of the Environment, the right hon. Gentleman had had a reputation for refusing to listen to Europe—not only in regard to law and regulations: he had had to be dragged to the door of the European Court before showing the slightest twitch of interest or intention in relation to environmental and water industry issues, let alone action. We received no answer that day to our question, and have received no answer since. No evidence has been produced to support the Government's decision. It is an example of appalling misjudgment to promote a

measure to undermine Britain's export drive, and an example of even worse judgment to press on when the case has been blown apart and everyone is against it.
The debate has produced a number of red herrings—not least from the hon. Member for Thurrock, who suggested that the ISG would be unable to compete in the European marketplace. It would be able to do so if the Government showed the necessary flexibility, and considered the options recommended in the Kemp report instead of being mesmerised by their own single solution. One of the problems that confront us now is the dead hand of the Treasury, which is clearly heavier than ever under the present Prime Minister.
The hon. Member for Teignbridge (Mr. Nicholls) offered us a curious argument which ignored the alternatives set out in the Kemp report. He argued that the existence of European regulations which have nothing to do with this Bill and nothing to do with any part of the ECGD somehow leads to an imperative for the Government to take action in this piece of legislation. This is complete nonsense. The Government's most enthusiastic supporters have been reduced to gobbledygook in this debate in trying to defend Government.
We have had the whole question of the EC. This was dealt with by Mr. Kemp in his report. I would point the Minister to the paragraph on page 52 when, having considered the European legislation and regulations, he points out that the Government have not accepted the argument that the arrangements gave unfair advantage to the exporters using their national schemes compared with exporters in other member states. There would thus, he said,
appear to be strong grounds for arguing that the Commission has de facto given its approval to state support for export credit agencies as at present practised by member states, with the exception of those activities that have been specifically declared unacceptable under the Treaty.
The hon. Member for Epping Forest (Mr. Norris) and his straight man, the hon. Member for Thurrock (Mr. Janman), both of whom have fled the Chamber, exposed the weakness of the Government's case, because, when they were asked to point to regulations, they could point to none, not even draft regulations, on the issues covered by the Bill. The best that they could do was to refer to article 92, signed in 1957, and it is clear that there is no pressure from Europe for us to move towards exposing our export industry. The EC is being used by the Government as a scapegoat for this piece of indefensible legislation.

Mr. Gerald Howarth: Is there not the non-life directive which means that the European marketplace is now open for competition in credit insurance, among other forms of insurance, throughout the European Community? Is there not therefore a necessity at least to provide some new structure for ECGD because Europe will be the home market? Does not this measure give us an excellent opportunity to bring about that restructuring?

Mr. Michael: The hon. Member for Cannock and Burntwood (Mr. Howarth) follows his colleagues by using a piece of EC legislation which has no relevence to this Bill to try to give it some sort of relevance in defence of the Government. I admire his persistence in doing that, but I can neither admire nor respect his logic. There is no logic in his argument.
Not only is there no regulation to which the Government can point, but, even if new regulations or


legislation were introduced in the EC, ample time—at least two or three years—would be allowed for credit insurers to change to the extent necessary. There is therefore no hurry.
Even more helpfully than other colleagues, the hon. Member for Epping asked the House the simple question: does the Bill help or hinder exporters? It is a simple question and it has two simple answers: it will not help and it will hinder. He had to call in aid a curious logic that led him into home affairs and an anonymous quotation in order to make the accusation that the Opposition are ineffective on this issue. I remind the House that it is the Government who refuse to look at any option but one at the present time.
I would also remind the House that we have reason to be concerned about the future. The Treasury will make an input to the review of ECGD in 1992–93, and it is bound then to press its preference for the zero option. The Minister must state categorically how long the Government will continue the support which was promised at the beginning of this debate. When introducing the Bill, the Minister failed to answer that question put to him very simply indeed: how long? It must be answered when he winds up, or we shall know that the answer to "how long" is "too short".
The hon. Member for Teignbridge went on to quote today's Financial Times. Selectively he quoted the most extreme paragraph of the only article, while these matters have been under debate anywhere in the press, to show any real favour to the Government's line—and even that article had to admit, rather weakly, that
privatisation has not yet been forced on the government by the European Commission. Simply changing the ECGD's charter might allow it scope to compete in the single market.
So even that article—the one supporter of the Government's curious approach—condemns the very case that a few hon. Members, a minority of hon. Members, on the Government Benches have sought to sustain today.
I wonder whether the hon. Member for Teignbridge has read other articles in the Financial Times. Did he see, for instance, the article on 10 January with the headline:
Exporters fear fresh drain on their credit.
A sub-heading read:
Resentment at the way British companies are denied the support enjoyed by continental rivals has prompted an unlikely alliance between City, industry and Labour.
That is not an unlikely composition, because the City and industry are becoming increasingly aware of the solid and responsible way in which Labour's team is dealing with these matters, which is leading them to an increasing consensus with Labour on the importance of having a Labour Government to deal properly with these issues.
I will cite two aspects of that article in the Financial Times. It quotes the London Chamber of Trade as saying:
It is imperative that the existing level of service to exporters from Cardiff, both in terms of the markets covered and the credit period available, should not be diminished.
Could we be clearer than that? The article also said:
Other European governments show no sign of winding down this kind of government support, but Whitehall has decreed that after a three-year transition period it will be withdrawn in the UK.
The government line that private reinsurers will quickly step in to fill the gap is hotly disputed in the marketplace, where withdrawal of support is seen as unilateral export disarmament. Adding to the exporters' alarm is the declining appetite for political risk reinsurance which the Gulf crisis has inspired in the Lloyd's market.

It is clear that the arguments of my hon. Friends, reinforced by gentle queries from Government Back Benchers, are correct, and that the case against the Bill is overwhelming.
The Financial Times article pointed out that the service of ISG in Cardiff is particularly valued by exporters in high risk countries. No hon. Member would deny that there are too many high risk areas in the world in which we have to compete if Britain's export record is to be restored from the dismal levels to which it has sunk under the Governnment. The Financial Times accurately reflects the views of the Labour party, of those who work in the ECGD and of exporters in the United Kingdom.
My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), in a characteristically thoughtful contribution, referred to the need for regional networks. Of course, the ISG has that network and a strong contact with all parts of the United Kingdom. Those of us who have battled locally against the Government's neglect of the regions will endorse his remarks wholeheartedly.
The hon. Member for Hereford (Mr. Shepherd) gave a series of warnings to the Minister and approached the question of competition within Europe in a sober and considered manner, much in contrast with the confidence shown outwardly by Ministers. He rightly identified the insistence of Ministers on not answering questions as highly suspicious. I suspect that their refusal to answer questions is more in their nature than in the brief. I do not think that it is fair to blame the civil servants. It is Ministers who have been refusing to answer straight questions put to them, not only today but in written questions, in discussions and in private meetings ever since the privatisation measure was first considered.
The hon. and learned Member for Montgomery (Mr. Carlile), who represents a part of Wales with relatively small industry and where Government help and support are much needed, did an excellent demolition job on the Government's case. Like many of us, he wants to know why the Government are responding to EC signals which are as covert as a smuggler's lamp, but from Back Benchers and Government alike, answer comes there none.
I state it simply: Europe has not pressed the Government to change in the way set out in the Bill. State-supported operations, such as those in France, have not fallen foul of European law or regulations. Time and again in parliamentary questions, Ministers have been offered opportunities to provide evidence for their claim that Europe is pushing us in that direction, but they have been no more successful than the hon. and motley Member for Teignbridge in producing the faintest iota of fact to back that claim. I shall be most surprised if the Minister, in his reply, does more than skirt around that attitude. It is a simple question. Let him, if he can, give us a simple answer.
The Minister, intervening on my hon. Friend the Member for Gateshead, East (Ms. Quin), asked what we would say if the Government failed to take action in good time. If they did that we would say that they were wrong, neglectful and stupid, but it is not what is happening with this Bill. I must again insist that Ministers, encouraged by Back Benchers of an extreme disposition, are jumping like lemmings when no one with any interest in encouraging exports is pushing them to take the actions outlined in this Bill.
It is a matter of fact that almost 80 per cent. of the insurance cover with existing customers is with customers having a turnover below £1 million a year. That is an extremely important part of our export industry. I draw the House's attention to the large number of jobs created in recent years—often not acknowledged by the Secretary of State for Wales, the Secretary of State for the Environment or the Secretary of State for Trade and Industry—through joint enterprises, work by local authorities, joint enterprises with private industry, such as the Cardiff and Vale enterprise in my own constituency, to build up the economy and help people start up in business, stay in business and expand. In the last two years, ECGD has been constrained by the Government to make swingeing increases in the premium rates it charges to businesses with £1 million turnover or less. That situation will be much worse after privatisation and the Government are wrong to place those businesses and the business that they bring to this country at risk.
The hon. Member for Surrey, North-West (Mr. Grylls) expressed concern that over 70 per cent. of businesses do not currently export. He was right to express that concern. The Minister's response that it would be useful for those firms to insure with one body is mischievous nonsense. These are just the types of businesses which need the security and confidence that come from a Government-backed institution and need an efficient public service to support them in their intitiatives and provide them with fresh encouragement to that end.

Mr. Sainsbury: In his very categorical statement the hon. Gentleman has said there would be, definitely, swingeing increases in premiums for small businesses. He says that small businesses have to have Government-backed insurance. Does that apply to all their other insurances? Can he produce facts to justify those allegations?

Mr. Michael: I can certainly state categorically, as I did, that there have been swingeing increases for small businesses which insure through ECGD. We know from the views of private industry, which have been expressed on the business of reinsurance, that this is an unpopular area which they would not take on board without increases in the insurance. That is far less of a surmise than the load of waffle that we have had from the Government Benches, both ministerially and from Back Benchers, since the beginning of this debate. If the Minister is so keen to be challenging on this issue, let him answer the simple question that I have asked him again and again: where is the evidence of EC regulations that bring about the requirement for any change? I see that he does not wish to.
In a written answer last week, the Secretary of State stated two principles. He said:
The Government continue to attach great importance to United Kingdom project and capital goods exports and to maintaining a viable and stable framework of ECGD support.
Secondly, he said:
the international debt crisis, and more recently the events in the Gulf, have shown the risks which are assumed by ECGD to be potentially very significant." [Official Report, 14 January 1991; Vol. 183, c. 359.]
That is important. The problem is that the second one is so important that it is overriding the first one in the Government's mind, not because they want to help industry but because they are worried about the financial commitment involved in giving support to private

industry. I regret that the Ministers seem to have lost their battle with the Treasury in seeking to balance, those priorities.
I point again to the confirmation in the Kemp report that there is no pressure from the United Kingdom exporting community or from the commercial sector generally for this changing status in any part of ECGD. The Kemp report also showed that the private sector does not and cannot provide services equivalent to those currently provided by that department.
Kemp also said—this is directly relevant to the question that the Minister asked me a moment ago:
It was also stated frankly by some brokers that small policy holders, were not commercially interesting to them and that there was no prospect of the private sector providing the counselling and service that such policy holders received at present through the ECGD regional organisations.
Not only will there be increases in premiums over and above those forced by the Government's dogma, but the service will deteriorate.
The hon. Member for Leeds, North-West rightly challenged the Government's view that the private sector is waiting in the wings to take the risk. He was equally right to discuss the partial view that the hon. Member for Cannock and Burntwood put forward. No sound business case exists for this privatisation. The decision to privatise is purely political. We accept that there would be increased competition for ISG services but consider that it would best be met by extending the scope of ECGD's activities so that it could insure exports from other EC countries and possibly United Kingdom domestic trade.
If implemented, as my hon. Friend the Member for Cardiff, West said, the privatisation of the ISG would directly affect more than 600 civil servants based in Cardiff and the regional network. At this stage, the proposal is for transfer to the Government company to be voluntary, but the most likely outcome, as he rightly said, is that insufficient staff will volunteer and coercion will prove necessary. Their transfer would be covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981, which merely impose the offer by a purchaser of an overall employment package which is no worse than that available in the civil service. All that that means is that those conditions apply on day one. There is no guarantee for employees on day two.
Why break up an efficient and successful operation? Why remove the conditions and security that employees have? Why attack morale in a department and an operation important to our national interest? Those questions must be answered, but have not been answered in this debate.
My hon. Friend the Member for Cardiff, West made a modest plea for staff in Cardiff. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) offered a promise, which he asked the Minister to reinforce, that staff conditions will not be adversely affected by the change. I share his hope that the Minister will clear that up but, even better, we shall hold the hon. Member for Nottingham, South to his promise when we consider these issues in Committee and seek to improve the protection of staff. There is no change on day one, but change on day two and thereafter offers no guarantee of hope for the future of those staff.
The right hon. Member for Chertsey and Walton (Sir G. Pattie) emphasised that he was not a whingeing exporter and underlined the importance of backing our


exporters. In effect, he agreed that there is no evidence of competitor countries rushing in the same lemming-like way to undermine their industrial capacity to export.
We know that there has been a renewed wrangle in Government in recent weeks, with the Chancellor wanting a clear break with no future commitment for finance from the Government on activities with which competitor countries are helped by their Governments. We know that small exporters are angry that the Government propose to hand political risk insurance to the private sector, making it less likely that United Kingdom manufacturers will be able to get protection for contracts where there is political instability. It is difficult to imagine circumstances which more graphically illustrate the importance of political risk insurance than the situation today, when our country is at war and when the political situation in eastern Europe and many other parts of the world offer a major challenge to our economy.
I highlight the comments of the Select Committee on the Treasury and Civil Service on the autumn statement. It underlined again and again the importance of exports to our economy. Paragraph 22 of its report stated:
Exporting may become increasingly difficult. An economic recovery based on increasing the growth of exports in the second half of 1991 is therefore far from assured. If the United Kingdom's export performance should falter, in the absence of some offsetting support from other components of domestic demand, the forecast for resumption of non-oil economic growth will not be achieved.
That is put at risk by the venture on which the Government are foolishly embarking. They were warned by the Select Committee that the outlook for the next year is, if anything, even more uncertain, with the consequence that potential errors could be greater than those implied by the average of past errors. We appeal to the Minister not to compound those errors by pressing ahead with this legislation.
We ask the Minister to defend British interests. He must surely accept the progression of events which will be inevitable once the Bill becomes an Act. He must accept that important issues need to be addressed. He must tell us how the Government will continue to meet their obligation to encourage United Kingdom trade once ECGD is privatised this year. Currently that is part of the work of ECGD. Has the Minister taken full cognisance of the recommendation of Ernst and Whinney in which it said that it
would not advocate the sale of ISG into the private sector in the absence of historical financial information. The absence of that information makes the raising of capital in the private market at best difficult at present, and could, in any case, significantly reduce the sale proceeds obtainable by Government for the business"?
That was a warning given by Ernst and Whinney. The Government have not responded by providing the House or those who are anxious about the future of ISG and our export industry with the financial facts. I suspect that that failure will be compounded by the Minister failing to give an answer today.
I urge the Minister to accept that, if he fails to defend British interests as we seek—especially in view of the Treasury's intransigence—it will be only a matter of time before decisions are taken on purely financial grounds and no attention is paid to public policy or national interest. Then it will be only a matter of time before overseas ownership dilutes still further the increasingly tenuous link

between our national interest and our export trade. It will then be only a matter of time before the pressures of commercial logic squeeze out trade which involves risk but is important to our national economy. It will be only a matter of time before jobs become less secure, high-quality senior staff in the ISG move elsewhere, conditions of work deteriorate and an important national asset is wasted.
Like the leech in the middle ages, the Government's cure is more painful than the condition that they seek to cure. The reasons put forward sound remarkably similar. The hon. Member for Cannock and Burntwood suggested that ECGD was not dying but going to another place. That sounds mealy-mouthed. Misplaced faith is the main characteristic of the No Turning Back group, a breed which seems to be a curious cross between a lemming and a rottweiler.
I urge the Government to accept that privatisation is a high-risk strategy. It is a sobering thought, but it is a fact, that if the insurance services group had been privatised two or three years ago, it could have been made insolvent purely as a result of the stock market crash of October 1987.
The hon. Member for Leeds, North-West said that industry wants a Government who care about its difficulties and about exports. He is right. We need a Government who want a fresh strength in British industry and who care about our manufacturing base and our need for future success in export trade. For that, and for a determination to return to common sense on the issues debated today, British exporters will have to wait for a Labour Government. The Opposition will vote against this ill-considered and short-sighted legislation.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh): We have had an interesting debate on this important legislation. Several points were raised and I shall try in the time available to answer the main questions. I shall reply in writing to any points that I cannot answer because of time constraints.
I apologise if I cannot reply to everything that the hon. Member for Cardiff, South and Penarth (Mr. Michael) said in his machine-gun delivery. I am sorry that he thinks that I am a cross between a lemming and a rottweiler. I like to think that I am rather a gentle sort. But I shall disappoint him in one respect. Contrary to his suggestion, I have not decided at this stage to withdraw the Bill. I have made that decision for good reasons.
As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said—he has apologised for the fact that urgent business elsewhere has unfortunately taken him away from the closing speeches—we all have a common aim. If we disagree on everything else in the debate, I hope that we can agree that our aim is to improve the services to our exporters. That is the key point in the debate. I assure my hon. Friends the Members for Hereford (Mr. Shepherd) and for Epping Forest (Mr. Norris) that our aim is simply to speed up the response rate and efficiency of ECGD.
In closing the debate, I should first make absolutely clear what the Government propose to privatise and why we believe it to be necessary. As my hon. Friend the Minister for Trade explained, ECGD's operations fall into two distinct categories. My hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) emphasised


that distinction. First, there is the insurance of project exports, such as aircraft, process plant and construction projects, involving credit terms of a least five years and often as long as 10 years. Secondly, there is the insurance of mainstream exports—anything from confectionery to cars—where credit risks of not more than six months need to be insured.
The first category of business, averaging more than £2 billion of exports each year, is handled by ECGD's project group based in London. Let me assure my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) that the Bill will not affect in any way ECGD's support for project exports. I also assure my hon. Friend the Member for Leeds, North-West (Dr. Hampson) that there is no wish among Treasury Ministers to weaken ECGD's contribution to the support of project exports.
Support for such business requires ECGD to underwrite large value payment risks, usually in developing countries, which can persist for as long as 20 years. Clearly, that requires some extremely difficult judgments to be made about the future. There is obviously a risk that, despite using the best information and best efforts to arrive at a right decision, events sometimes do not turn out as well as anticipated and ECGD has to face a claim.
Of course we want to support our exporters, contrary to what the hon. Member for Gateshead, East (Ms. Quin) suggested in her opening speech. No one involved in the financing of international trade predicted that we would have a debt crisis as severe as that which arose in the early 1980s. ECGD shared that experience, and the results have shown up in the large deficits that have emerged in its financial results during the past few years.
I can tell the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that privatisation has nothing to do with ECGD's deficit, which is due entirely to the project business.

Dr. Hampson: Is it not fair to say that ECGD has done considerably less badly than most of our competitor countries' systems?

Mr. Leigh: Yes, it is fair to say that. Clearly, we are in a difficult position, a point that I know my hon. Friend the Member for Leeds, North-West made most powerfully in his speech. The aim of the system that we are introducing is to address a problem that undoubtedly needs solving.
The experience of the debt crisis in the world prompted the initiative that resulted in the announcement by my right hon. Friend the Secretary of State for Trade and Industry last week of the introduction of the portfolio management system. My hon. Friend the Minister for Trade dealt with that in some detail in his opening speech.
I accept that the portfolio management system contains some elements that our exporters would prefer not to see, which is unremarkable. As my hon. Friend the Minister for Trade said, ECGD's support for project exports has, in recent years, proved to be an expensive business for the taxpayer, largely as a result of the debt crisis. However, by no stretch of the imagination can our policy response in the face of the mounting cost of that support be characterised, as some have tried to do in the debate—particularly the hon. Member for Gateshead, East—as its effective withdrawal. My hon. Friend the Member for Thurrock (Mr. Janman) made that clear today.
We have not withdrawn support, because we recognise that, without it, our exporters' prospects of winning business in the face of fierce international competition would be seriously damaged. But we also recognise that, even if others should want to do that, there is no point in supporting exports that stand little chance of being paid for—a point made in the Financial Times article today. It is all a question of trying to draw a sensible balance that recognises not only the competitive needs of exporters but also the risks of the taxpayer. PMS is simply the risk-analysis framework that helps us in that task. There is nothing sinister about it. It does not take decisions for us; that difficult task will quite properly rest with my hon. Friend the Minister for Trade.

Mr. Colin Shepherd: Can my hon. Friend confirm that the understanding of the ECGD itself is that premium rates in the United Kingdom are higher than those of major overseas competitors?

Mr. Leigh: Rates vary from market to market, but I can confirm that, on average, United Kingdom rates are high. I hope that my hon. Friend accepts that one advantage of PMS is that it will result in higher risks requiring higher premiums, and in lower risks requiring lower premiums. That seems to be entirely sensible. My hon. Friend, in his contribution, raised some very interesting questions. I hope that he will accept that, given the debt crisis, we had to introduce PMS for the sake of the taxpayer as well as of the exporter.
The first fruits of PMS have been to demonstrate, first, the risk posed for the ECGD scheme of its being unduly exposed on high-risk markets and, secondly, the extent to which its current premium rates are not sufficiently matched to the risk. In response to the latter point, the ECGD will be increasing its rates on the higher-risk markets. Overall, its premium income is expected to rise by about 10 per cent. This must be seen as a minimum response to the problem, and to represent it as an unnecessary or serious blow to our exporters' competitiveness is both to mislead and to exaggerate.

Mrs. Elizabeth Peacock: I have been listening carefully to the Minister's reply. Can he assure the House and the large textile companies, particularly those in Yorkshire, that what the Government are proposing will not adversely affect the ability of those companies to export throughout the world?

Mr. Leigh: Textile exports will be covered by Insurance Services, but I have noted my hon. Friend's question.
I reassure my hon. Friend the Member for Leeds, North-West that there is no question of short-termism, that premium rate subsidies will be eliminated only on the basis of multilateral international agreement. My hon. Friend the Member for Hereford said that we must not go down the road of unilateralism. We have no intention of so doing.
I should like to deal now with individual markets. Decisions on the volume of ECGD cover on individual markets are both more difficult and more important. Clearly, given recent experience, it would be quite irresponsible of the Government not to adopt a prudent and disciplined approach to arriving at these judgments. However, this does not mean that, on the more difficult markets, cover will be withdrawn. I can give that assurance to my hon. Friend the Member for Leeds, North-West,


who also raised the point. What it does mean is that we shall need to look more carefully at the balance between national interest and risk.
The starting point will obviously be a wish on the part of the Government to help our exporters to win worthwhile export contracts. The constraint will be the assessment of the financial risk in doing so. There will be extremely difficult judgments to make, but we are confident that the result will be ECGD's continuing to give our exporters the support they need to compete successfully for overseas projects that represent a not unreasonable credit risk.
The suggestion that the Government are not committed to support for project exports is simply not borne out by the facts. The suggestion that more could be done and that PMS should be abandoned is beguiling and may win friends in some quarters, but it is an irresponsible denial of the hard lessons of the recent past and the debt burden that we face. I believe that the difficult decisions we have taken represent the only way forward and a good deal for our exporters.

Mr. Gerald Howarth: My hon. Friend knows that successive Governments have come under enormous pressure from contractors and others engaged in projects overseas for support from the taxpayer—from ECGD—on account of the fact that certain countries do not represent a good long-term risk for the contractors. Is it not the case that the Government, throughout their lifetime, have solidly demonstrated their maximum support for industry—particularly through the aid and trade contingency provision when exporters claim that they are up against unfair competition, especially from the French? This provision was designed by the Government to ensure that exporters would be able to go out and win contracts.

Mr. Leigh: I am glad that my hon. Friend for Cannock and Burntwood (Mr. Howarth), who is a banker and knows about these things, has had an opportunity to make the point that he has been waiting to make all day.
By contrast, the second category of the ECGD's business—exports on short-term credit totalling some £14 billion each year handled by the insurance services group in Cardiff—presents underwriting risks that can be managed much more effectively, and where the meeting of a given financial objective is much more achievable. Hundreds of thousands of export transactions are involved each year and about 75 per cent. of this business concerns commercial risks in the EC and OECD countries. It is already run by ECGD as a commercial activity and without Government subsidy. Even if there were not overriding reasons to want to change its current status, it would be a strong candidate for privatisation.
I emphasise that the prime motivation for privatisation arose from an assessment in an expert and independent review commissioned in 1988 by the then Secretary of State, and known as the Kemp report, which has been referred to several times. It concluded that, if Insurance Services were to be able to continue to provide our exporters with the service they need, it simply had to go through a change of status.
I make it clear, in response to a point raised by the hon. and learned Member for Montgomery (Mr. Carlile), that,

according to the Kemp report, a financial track record should be established. This track record can be created retrospectively out of Insurance Services' past activities. This is being done so that investors will immediately have relevant information. Therefore, early privatisation is both possible and desirable for that reason.
My hon. Friend the Minister for Trade referred to the competitive and legal challenges confronting Insurance Services and the risk that, without a change of status, these challenges could deprive the ECGD of the best 75 per cent. of its business. It would clearly be a denial of the Government's responsibility both to our exporters and to the taxpayer to allow a situation to develop where the short-term business of this fine organisation was reduced to the status of an insurer of last resort, focusing only on exports to the developing countries.
I must repeat that these are the considerations that have led us to the conclusion that privatisation is essential and that maintaining the status quo is simply not an option. The other benefits that we can expect to flow from privatisation in terms of greater flexibility are icing on the cake. I shall deal now with some more specific issues. Some have played down the competitive pressures to which the insurance services business is subject. They have also challenged the Government's view that, even if it were a credible option on other grounds, which it is not, maintaining the status quo for the insurance services business will, in due course, become an option that will face serious legal challenge from Brussels.
The competitive challenge was mentioned in particular by my hon. Friend the Minister for Trade. We know, although some Opposition Members seem not to accept this, that competition is vital, and we cannot pretend that it does not exist. That is a luxury in which business managers cannot afford to indulge, and they certainly do not wait until they have lost their best customers before deciding that, yes, they do have a bit of a competitive problem about which they should do something. I accept that, at present, Insurance Services is the dominant supplier of short-term export credit insurance in the United Kingdom, but only a few years ago it enjoyed a virtual monopoly. This process of greater competition can only accelerate as the single market becomes a reality.

Mr. Gerald Howarth: My hon. Friend is on to a good point. New entrants from the continental and American markets are already in the market in the United Kingdom and the ECGD no longer enjoys a monopoly. It has 70 per cent. of the market, and is under threat. Therefore, the Bill will provide the ECGD with an opportunity to restructure so that it can meet the challenge.

Mr. Leigh: That is absolutely right. My hon. Friend knows about the competitive environment in which the ECGD exists, and is right to emphasise that point. British companies will cease for credit insurance purposes to compartmentalise their business into domestic, EC and OECD work. They will see, indeed are seeing, the advantages of a single insurance policy covering all their needs. They will be able to look at a wider range of insurers—companies throughout Europe which have been freed from the insurance directive to market their services throughout the community.
Where will Insurance Services be in all this if we do not change its status? Almost certainly, it will be struggling to maintain market share against a tide of new competition


with one hand tied behind its back. This would be disastrous for the business, its customers—our exporters—the staff and the taxpayer. A privatised insurance service will be able to compete fairly and equally.
The legal challenge was lightly dismissed by the hon. Member for Gateshead, East (Ms. Quin). Although the Kemp report was written some years ago, increasing attention is being paid in Brussels to the problems associated with the single market and state subsidy of export insurance. We recognise that this work is being carried out. It is right to address that problem and to act in good time.
As my hon. Friend the Member for Epping Forest said most clearly, the treaty of Rome says all that is needed on the subject. Where state involvement distorts competition, article 92 makes it clear that this would represent state aid, which is incompatible with the Common Market.

Ms. Quin: I have article 92 in front of me. There are several exceptions in the article, which makes it quite clear that aid can be granted in specific areas and areas which can be agreed at any point by the European Council of Ministers. Would the Minister also accept that there is a tremendous variety of levels of state aid given in the European Community? In fact, both Germany and Italy give more than we do, and those aids are deemed compatible with the Common Market. Therefore, to rely on article 92, as the Minister and his hon. Friends have done, is a delusion in this case.

Mr. Leigh: It is not a delusion. If the hon. Lady reads article 92, she will see that those exceptions do not apply to exports to EC and OECD countries. Therefore, her point does not apply. There is almost universal recognition within the relevant expert working group in Brussels that much short-term export credit insurance is an area of genuine competition between private sector and state insurers, and that the latter enjoy advantages which make for unfair competition under the treaty of Rome. Discussion is centering on how to make the playing field level, but while the debate goes on, virtually all EC Governments are considering steps to distance their official agencies from the state as far as cover for short term export credits is concerned.
Examples were quoted, particularly by the hon. Member for Warrington, North (Mr. Hoyle) about what is happening in other European countries. In Germany and in the Netherlands, the structure which we are trying to achieve, involving a private company handling short-term business but benefiting from Government backing in respect of the more difficult risks, already exists. In France, state reinsurance of the bulk of short-term political risks has been transferred to the commercial reinsurance market.
Denmark is considering the privatisation of its official agency. Portugal is moving partially to privatise its agency, and we know that the Belgians are reviewing the status of theirs. If that is not a picture of our competitors in the EC taking action to address his problem, I do not know what is. I do not believe that we could accept a halfway house. It is dangerously misleading to suggest that there is some safer, no-change haven which the Government are deliberately trying to ignore.
Some myths have been perpetrated in this debate. First of all, let me deal with exporters. At every stage in the process culminating in this Bill, there has been

overwhelming endorsement by all interested parties of the Government's analysis of the threats confronting insurance services.
Contrary to the impression given by the hon. Member for Gateshead, East, the response has been overwhelming. I hope that exporters listen to the facts and are reassured. I cannot emphasise enough that the motivation behind the exercise has all along been a desire on the Government's part to ensure that the ECGD was placed in the best position to meet exporters' needs after 1992.
The truth about the alleged lack of interest is that some parts of the press, particularly The Guardian, have speculated and got it badly wrong. The fact is that serious interest has been and continues to be shown—[Interruption.] It is a pity that Opposition Members are not listening. Serious interest has been and continues to be shown in buying the business on the part of a good number of institutions from a variety of backgrounds. That should hardly be a surprise, given the expertise and experience of the business which is on offer. It is more surprising that the more pessimistic scenario should be given any credibility. Perhaps it suited the book of those opposed to privatisation to peddle such myths.
On staff implications, I pay particular attention to the comments made by the hon. Members for Warrington, North, for Dundee, East (Mr. McAllion) for Cardiff, South and Penarth and for Cardiff, West (Mr. Morgan). First, I emphasise the importance that the Government attach to maintaining the commitment and skills of the staff concerned. That is vital for the company's future success. The new owners will readily understand that when offering the transferring staff terms and conditions of employment to replace those that they currently enjoy in the civil service.

Mr. Michael: Will the Minister give way?

Mr. Leigh: I still have some points to make, so I must continue.[Interruption.] The hon. Gentleman asked for certain assurances.
To the extent that the Government can do so through the Bill and other arrangements, they will give staff the reassurance that their terms and conditions would be at least as good as their present ones. Once a final package has been negotiated with the new owners—

Mr. Michael: Will the Minister give way?

Mr. Leigh: No. I should have thought that the hon. Gentleman would have liked to have the assurance that I am now giving to the staff of the ECGD.
Once the final package has been negotiated with the new owners, the staff will be given a clear month in which to assess it and to state their final preferences as to whether they wish to join the new company or to remain in the civil service. It has throughout been the Government's intention that the eventual allocation of staff to the company and the ECGD should reflect the final preferences—I emphasise those words—expressed by staff, where that is consistent with the business needs of the new organisation.

Mr. Michael: Will the Minister give way?

Mr. Leigh: No.
In this debate, my hon. Friend the Minister for Trade and I have succeeded in showing that the impetus for the measure has not been imposed from above as a matter of


ideology. It has come up from below, to meet the competitive challenge facing the industry and because of the legal position facing our exporters.
During the past 10 years, the Government have transformed the economic climate for our exporters. We in this Department are determined to ensure that the demands of society are met by the business environment. We have made that business environment possible by cutting taxes, by privatisation measures and by deregulation.
Contrary to what has been explained and claimed in the debate by Opposition Members, there has been an enormous interest in the privatisation measure. We must not disappoint those people who are interested in buying what will be a successful first-rate company and a major private institution standing up for Britain and for our exporters.
The Labour party's do-nothing approach is typical, but it ignores the real world. It simply will not wash. It ignores the legal and competitive challenge facing the industry. We are used to the Labour party doing the wrong thing for the wrong reasons, but it seems to be suggesting today that we should be doing the wrong thing for no reason at all.
The Government are determined to create a business environment in a changing export world where our exporters are fully supported. We intend to see the Bill through to its conclusion, and I commend it to the House.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 283, Noes 223.

Division No. 43]
[10 pm


AYES


Adley, Robert
Burt, Alistair


Aitken, Jonathan
Butterfill, John


Alexander, Richard
Carlisle, John, (Luton N)


Alison, Rt Hon Michael
Chapman, Sydney


Amess, David
Chope, Christopher


Amos, Alan
Clarke, Rt Hon K. (Rushclifte)


Arbuthnot, James
Colvin, Michael


Arnold, Jacques (Gravesham)
Conway, Derek


Arnold, Sir Thomas
Coombs, Simon (Swindon)


Aspinwall, Jack
Cope, Rt Hon John


Atkinson, David
Currie, Mrs Edwina


Baker, Nicholas (Dorset N)
Davies, Q. (Stamf'd &amp; Spald'g)


Baldry, Tony
Davis, David (Boothferry)


Banks, Robert (Harrogate)
Dicks, Terry


Batiste, Spencer
Dorrell, Stephen


Beaumont-Dark, Anthony
Douglas-Hamilton, Lord James


Bellingham, Henry
Dykes, Hugh


Bendall, Vivian
Eggar, Tim


Bennett, Nicholas (Pembroke)
Emery, Sir Peter


Benyon, W.
Evans, David (Welwyn Hatf'd)


Bevan, David Gilroy
Evennett, David


Biffen, Rt Hon John
Fairbairn, Sir Nicholas


Blackburn, Dr John G.
Fallon, Michael


Blaker, Rt Hon Sir Peter
Favell, Tony


Body, Sir Richard
Fenner, Dame Peggy


Bonsor, Sir Nicholas
Field, Barry (Isle of Wight)


Boscawen, Hon Robert
Finsberg, Sir Geoffrey


Boswell, Tim
Fishburn, John Dudley


Bottomley, Peter
Fookes, Dame Janet


Bottomley, Mrs Virginia
Forman, Nigel


Bowden, Gerald (Dulwich)
Forsyth, Michael (Stirling)


Bowis, John
Forth, Eric


Boyson, Rt Hon Dr Sir Rhodes
Fowler, Rt Hon Sir Norman


Brandon-Bravo, Martin
Fox, Sir Marcus


Brazier, Julian
Franks, Cecil


Bright, Graham
French, Douglas


Brown, Michael (Brigg &amp; Cl't's)
Fry, Peter


Bruce, Ian (Dorset South)
Gale, Roger


Buchanan-Smith, Rt Hon Alick
Gardiner, Sir George





Garel-Jones, Tristan
Mans, Keith


Gill, Christopher
Maples, John


Glyn, Dr Sir Alan
Marland, Paul


Goodhart, Sir Philip
Marshall, John (Hendon S)


Goodlad, Alastair
Marshall, Sir Michael (Arundel)


Gorman, Mrs Teresa
Martin, David (Portsmouth S)


Grant, Sir Anthony (CambsSW)
Maude, Hon Francis


Greenway, Harry (Ealing N)
Maxwell-Hyslop, Robin


Greenway, John (Ryedale)
Mayhew, Rt Hon Sir Patrick


Gregory, Conal
Meyer, Sir Anthony


Griffiths, Peter (Portsmouth N)
Mills, Iain


Grist, Ian
Miscampbell, Norman


Ground, Patrick
Mitchell, Andrew (Gedling)


Grylls, Michael
Mitchell, Sir David


Hague, William
Moate, Roger


Hamilton, Hon Archie (Epsom)
Monro, Sir Hector


Hamilton, Neil (Tatton)
Montgomery, Sir Fergus


Hampson, Dr Keith
Morris, M (N'hampton S)


Hanley, Jeremy
Morrison, Sir Charles


Hannam, John
Morrison, Rt Hon Sir Peter


Hargreaves, A. (B'ham H'll Gr')
Moss, Malcolm


Hargreaves, Ken (Hyndburn)
Moynihan, Hon Colin


Harris, David
Mudd, David


Haselhurst, Alan
Neale, Sir Gerrard


Hawkins, Christopher
Nelson, Anthony


Hayes, Jerry
Neubert, Sir Michael


Hayhoe, Rt Hon Sir Barney
Newton, Rt Hon Tony


Hayward, Robert
Nicholls, Patrick


Heathcoat-Amory, David
Nicholson, David (Taunton)


Hicks, Mrs Maureen (Wolv' NE)
Norris, Steve


Hicks, Robert (Cornwall SE)
Onslow, Rt Hon Cranley


Higgins, Rt Hon Terence L.
Oppenheim, Phillip


Hill, James
Page, Richard


Hind, Kenneth
Paice, James


Hogg, Hon Douglas (Gr'th'm)
Patten, Rt Hon Chris (Bath)


Hordern, Sir Peter
Patten, Rt Hon John


Howarth, Alan (Strat'd-on-A)
Pattie, Rt Hon Sir Geoffrey


Howarth, G. (Cannock &amp; B'wd)
Pawsey, James


Howell, Ralph (North Norfolk)
Peacock, Mrs Elizabeth


Hughes, Robert G. (Harrow W)
Porter, Barry (Wirral S)


Hunt, David (Wirral W)
Porter, David (Waveney)


Hunt, Sir John (Ravensbourne)
Portillo, Michael


Hunter, Andrew
Powell, William (Corby)


Irvine, Michael
Price, Sir David


Irving, Sir Charles
Raff an, Keith


Jack, Michael
Raison, Rt Hon Sir Timothy


Janman, Tim
Redwood, John


Jessel, Toby
Renton, Rt Hon Tim


Johnson Smith, Sir Geoffrey
Rhodes James, Robert


Jones, Robert B (Herts W)
Riddick, Graham


Kellett-Bowman, Dame Elaine
Ridley, Rt Hon Nicholas


Key, Robert
Ridsdale, Sir Julian


Kilfedder, James
Roberts, Sir Wyn (Conwy)


King, Roger (B'ham N'thfield)
Roe, Mrs Marion


King, Rt Hon Tom (Bridgwater)
Rossi, Sir Hugh


Knapman, Roger
Rost, Peter


Knight, Greg (Derby North)
Rowe, Andrew


Knight, Dame Jill (Edgbaston)
Rumbold, Rt Hon Mrs Angela


Knowles, Michael
Ryder, Richard


Knox, David
Sackville, Hon Tom


Lang, Ian
Sainsbury, Hon Tim


Latham, Michael
Shaw, David (Dover)


Lawrence, Ivan
Shaw, Sir Giles (Pudsey)


Leigh, Edward (Gainsbor'gh)
Shelton, Sir William


Lennox-Boyd, Hon Mark
Shephard, Mrs G. (Norfolk SW)


Lester, Jim (Broxtowe)
Shepherd, Colin (Hereford)


Lilley, Peter
Shepherd, Richard (Aldridge)


Lloyd, Sir Ian (Havant)
Shersby, Michael


Lloyd, Peter (Fareham)
Sims, Roger


Lord, Michael
Smith, Sir Dudley (Warwick)


Luce, Rt Hon Sir Richard
Smith, Tim (Beaconsfield)


McCrindle, Sir Robert
Soames, Hon Nicholas


Macfarlane, Sir Neil
Speed, Keith


MacGregor, Rt Hon John
Speller, Tony


MacKay, Andrew (E Berkshire)
Spicer, Sir Jim (Dorset W)


Maclean, David
Squire, Robin


McLoughlin, Patrick
Stanbrook, Ivor


McNair-Wilson, Sir Patrick
Stanley, Rt Hon Sir John


Madel, David
Steen, Anthony


Malins, Humfrey
Stern, Michael






Stevens, Lewis
Waller, Gary


Stewart, Allan (Eastwood)
Ward, John


Stewart, Andy (Sherwood)
Wardle, Charles (Bexhill)


Stewart, Rt Hon Ian (Herts N)
Warren, Kenneth


Stokes, Sir John
Watts, John


Sumberg, David
Wells, Bowen


Summerson, Hugo
Wheeler, Sir John


Tapsell, Sir Peter
Whitney, Ray


Taylor, Ian (Esher)
Widdecombe, Ann


Taylor, John M (Solihull)
Wiggin, Jerry


Taylor, Teddy (S'end E)
Wilkinson, John


Tebbit, Rt Hon Norman
Wilshire, David


Temple-Morris, Peter
Winterton, Mrs Ann


Thompson, D. (Calder Valley)
Winterton, Nicholas


Thompson, Patrick (Norwich N)
Wolfson, Mark


Thornton, Malcolm
Wood, Timothy


Thurnham, Peter
Woodcock, Dr. Mike


Townsend, Cyril D. (B'heath)
Yeo, Tim


Tracey, Richard
Young, Sir George (Acton)


Tredinnick, David
Younger, Rt Hon George


Trippier, David



Twinn, Dr Ian
Tellers for the Ayes:


Vaughan, Sir Gerard
Mr. Irvine Patrick and


Wakeham, Rt Hon John
Mr. Timothy Kirkhope.


Walden, George



NOES


Abbott, Ms Diane
Cryer, Bob


Adams, Mrs. Irene (Paisley, N.)
Cummings, John


Allen, Graham
Cunliffe, Lawrence


Alton, David
Dalyell, Tam


Anderson, Donald
Darling, Alistair


Archer, Rt Hon Peter
Davies, Rt Hon Denzil (Llanelli)


Armstrong, Hilary
Davies, Ron (Caerphilly)


Ashley, Rt Hon Jack
Davis, Terry (B'ham Hodge H'l)


Ashton, Joe
Dewar, Donald


Banks, Tony (Newham NW)
Dixon, Don


Barnes, Harry (Derbyshire NE)
Dobson, Frank


Barron, Kevin
Doran, Frank


Battle, John
Dunnachie, Jimmy


Beckett, Margaret
Dunwoody, Hon Mrs Gwyneth


Beggs, Roy
Eadie, Alexander


Bell, Stuart
Eastham, Ken


Bellotti, David
Evans, John (St Helens N)


Benn, Rt Hon Tony
Ewing, Harry (Falkirk E)


Bennett, A. F. (D'nt'n &amp; R'dish)
Fatchett, Derek


Benton, Joseph
Fearn, Ronald


Bermingham, Gerald
Field, Frank (Birkenhead)


Bidwell, Sydney
Fields, Terry (L'pool B G'n)


Blair, Tony
Fisher, Mark


Blunkett, David
Flynn, Paul


Boateng, Paul
Foot, Rt Hon Michael


Boyes, Roland
Forsythe, Clifford (Antrim S)


Bradley, Keith
Foster, Derek


Bray, Dr Jeremy
Foulkes, George


Brown, Gordon (D'mline E)
Fraser, John


Brown, Nicholas (Newcastle E)
Fyfe, Maria


Brown, Ron (Edinburgh Leith)
Galloway, George


Bruce, Malcolm (Gordon)
Garrett, John (Norwich South)


Buckley, George J.
Garrett, Ted (Wallsend)


Caborn, Richard
Gilbert, Rt Hon Dr John


Campbell, Menzies (Fife NE)
Godman, Dr Norman A.


Campbell-Savours, D. N.
Golding, Mrs Llin


Canavan, Dennis
Gordon, Mildred


Carlile, Alex (Monf'g)
Gould, Bryan


Clark, Dr David (S Shields)
Graham, Thomas


Clarke, Tom (Monklands W)
Grant, Bernie (Tottenham)


Clay, Bob
Griffiths, Nigel (Edinburgh S)


Clelland, David
Griffiths, Win (Bridgend)


Clwyd, Mrs Ann
Grocott, Bruce


Cohen, Harry
Hardy, Peter


Cook, Robin (Livingston)
Harman, Ms Harriet


Corbett, Robin
Heal, Mrs Sylvia


Corbyn, Jeremy
Healey, Rt Hon Denis


Cousins, Jim
Henderson, Doug


Crowther, Stan
Hinchliffe, David





Hogg, N. (C'nauld &amp; Kilsyth)
Pendry, Tom


Hood, Jimmy
Pike, Peter L.


Howells, Geraint
Powell, Ray (Ogmore)


Howells, Dr. Kim (Pontypridd)
Prescott, John


Hoyle, Doug
Primarolo, Dawn


Hughes, John (Coventry NE)
Quin, Ms Joyce


Hughes, Robert (Aberdeen N)
Radice, Giles


Hughes, Roy (Newport E)
Randall, Stuart


Illsley, Eric
Redmond, Martin


Ingram, Adam
Rees, Rt Hon Merlyn


Janner, Greville
Reid, Dr John


Jones, Barry (Alyn &amp; Deeside)
Richardson, Jo


Jones, Martyn (Clwyd S W)
Robertson, George


Kaufman, Rt Hon Gerald
Robinson, Geoffrey


Kinnock, Rt Hon Neil
Rogers, Allan


Kirkwood, Archy
Rooker, Jeff


Lambie, David
Rooney, Terence


Lamond, James
Ross, Ernie (Dundee W)


Leadbitter, Ted
Ross, William (Londonderry E)


Leighton, Ron
Rowlands, Ted


Lestor, Joan (Eccles)
Ruddock, Joan


Lewis, Terry
Sedgemore, Brian


Litherland, Robert
Sheerman, Barry


Livingstone, Ken
Sheldon, Rt Hon Robert


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Short, Clare


Loyden, Eddie
Skinner, Dennis


McAllion, John
Smith, Andrew (Oxford E)


McCartney, Ian
Smith, C. (Isl'ton &amp; F'bury)


Macdonald, Calum A.
Smith, Rt Hon J. (Monk'ds E)


McKay, Allen (Barnsley West)
Smith, J. P. (Vale of Glam)


McKelvey, William
Smyth, Rev Martin (Belfast S)


McLeish, Henry
Snape, Peter


McMaster, Gordon
Soley, Clive


McNamara, Kevin
Spearing, Nigel


Madden, Max
Steel, Rt Hon Sir David


Mahon, Mrs Alice
Steinberg, Gerry


Marek, Dr John
Stott, Roger


Marshall, David (Shettleston)
Strang, Gavin


Marshall, Jim (Leicester S)
Straw, Jack


Martin, Michael J. (Springburn)
Taylor, Mrs Ann (Dewsbury)


Martlew, Eric
Taylor, Rt Hon J. D. (S'ford)


Maxton, John
Thompson, Jack (Wansbeck)


Meacher, Michael
Trimble, David


Meale, Alan
Turner, Dennis


Michael, Alun
Vaz, Keith


Michie, Bill (Sheffield Heeley)
Walker, A. Cecil (Belfast N)


Michie, Mrs Ray (Arg'l &amp; Bute)
Wallace, James


Mitchell, Austin (G't Grimsby)
Walley, Joan


Moonie, Dr Lewis
Warden, Gareth (Gower)


Morgan, Rhodri
Wareing, Robert N.


Morley, Elliot
Welsh, Michael (Doncaster N)


Morris, Rt Hon A. (W'shawe)
Williams, Rt Hon Alan


Morris, Rt Hon J. (Aberavon)
Williams, Alan W. (Carm'then)


Mowlam, Marjorie
Wilson, Brian


Mullin, Chris
Winnick, David


Murphy, Paul
Wise, Mrs Audrey


Nellist, Dave
Worthington, Tony


Oakes, Rt Hon Gordon
Wray, Jimmy


O'Brien, William
Young, David (Bolton SE)


O'Hara, Edward



O'Neill, Martin
Tellers for the Noes:


Orme, Rt Hon Stanley
Mr. Frank Haynes and


Parry, Robert
Mr. Thomas McAvoy.


Patchett, Terry

Question accordingly agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

Mr. Tam Dalyell: On a point of order, Mr. Speaker.

Mr. Speaker: Just a moment—I am on my feet.

Export and Investment Guarantees Bill [Money]

Queen's Recommendation having been signified—

Motion made, and Question proposed,
That for the purpose of any Act resulting from the Export and Investment Guarantees Bill ('the Act'), it is expedient to authorise—

(1) the payment out of money provided by Parliament of any sums required by the Secretary of State for making payments or defraying his administrative expenses under the Act and the charging on and payment out of the Consolidated Fund of sums not paid out of money provided by Parliament which are required by the Secretary of State for fulfilling his liabilities under the Act, and
(2) the payment into the Consolidated Fund of sums received by the Secretary of State by virtue of the Act.—[Mr. Sainsbury.]

Mr. Bob Cryer: I am sorry about the point of order by my hon. Friend the Member for Linlithgow (Mr. Dalyell), but I had to get in, or the money resolution would have gone through on the nod, and I know that you, Mr. Speaker, and the House would not like that. It is rather strange that the Government are making such a fuss over this Bill instead of renewing it, because every stage of the original Bill, the Export Guarantees and Overseas Investment Act 1978, which is mentioned in the explanatory and financial memorandum, went through on the nod on 13 June 1978. Where were the Tory Opposition in 1978, if such legislation is now so unnecessary tht it was allowed to go through without protest? The only difference that I can see is this: whereas we had an export surplus then, we now have a £20 billion deficit, and the Government are proposing to jettison an important component of assistance.
I hope that the Government will not be prejudiced in favour of the Bill, and the financial support for it granted under clauses 5 and 6, by the fact that, as recently as March 1989—unaware, apparently, of the true character of the Iraqi regime—they increased ECGD provision for Iraq from £175 million to £340 million. You will be surprised to learn, Mr. Speaker, that that was done shortly after the regime gassed the Kurds.
It is a bit startling that the Government should use money for that purpose. I hope that the privatisation provisions in clause 8 have not been brought about by prejudice as a result of political decisions in favour of the Iraqi regime that were made by the Government of which both Ministers were officers.

Mr. Nellist: Is my hon. Friend aware that the same thing happened on another occasion? In October 1988, the then Minister of State, Foreign and Commonwealth Office—now Secretary of State for Health—reported to the House that people known colloquially as "marsh Arabs", living in villages north of Basra—

Mr. Speaker: Order. What has this to do with the ECGD?

Mr. Nellist: I am explaining that, Mr. Speaker.

Mr. Speaker: Well, try and explain it to me.

Mr. Nellist: I am not making a point of order, Mr. Speaker; this is an intervention, and you would see its relevance if you allowed me to complete it.

Mr. Speaker: I am anxious to find out whether the hon. Gentleman is in order.

Mr. Nellist: My hon. Friend the Member for Bradford, South (Mr. Cryer)—without being challenged on the ground that he is out of order—has mentioned an occasion when a certain event in Iraq resulted in a reward: the doubling of trade credits by the Government, under ECGD provision. I was reminding him that a similar event took place in October 1988, when the present Secretary of State for Health reported to the House that thousands of people were being killed in Iraq. Nine days later, the then Secretary of State for Trade and Industry, who was responsible for the Department that we are discussing tonight, increased trade credits to Iraq by another £440 million.

Mr. Speaker: Order. The hon. Gentleman's remarks might have been very relevant to the main debate, but the House is now debating the money resolution.

Mr. Cryer: I am grateful for your guidance, Mr. Speaker.
Before the Minister points out that I missed his opening speech, let me explain that I have been chairing the Joint Committee on Statutory Instruments and then attending the Select Committee on Members' Interests, and was therefore unable to listen to what he had to say. He may have given a comprehensive explanation of the position; when winding up, however, the Minister failed to do so, so it is fair for me to raise these points. I know that the Minister is anxious to provide an explanation.
What concerns me is the amount of money under clause 6, which limits our commitments in sterling to £35 million; this figure cannot be exceeded. In the case of commitments in foreign currency, special drawing rights must not exceed 15,000 million. I take it that the 15,000 million is in any specific currency that the Secretary of State may choose, because no currency is defined in the Bill. It would seem reasonable to do so. I hope that the Minister can give that explanation.
I hope that the Minister will accept that the changes at ECGD and the proposed privatisation are matters of concern to our exporters who seek Government assistance. As has been made clear during the debate, the premiums charged by ECGD are far from the lowest in the Common Market; they cannot therefore be regarded as state assistance and hence in breach of the treaty of Rome. On balance, the charges for the United Kingdom are generally higher than in other countries, so surely the ECGD cannot possibly be criticised as state assistance and therefore a distortion of competition under the lunatic treaty of Rome.
The Secretary of State is given powers under clause 6 to increase the limits of various subsections, and they are set out clearly in the Bill as being under affirmative order. In clause 15(3), the powers to make orders under clauses 5 or 6—that includes increases of money and so comes within the financial resolution—come in the form of an affirmative resolution. Everyone welcomes that, because it gives us the opportunity to debate the issue.
But there is another important part which is affected by the money resolution, because it relates to the costs to the Minister arising out of this Bill. Under clause 8, the Minister has the power to provide a scheme to transfer or delegate ECGD functions. This is the privatisation part.
I have looked at the legislation, because it uses rather strange language in clause 8: it apparently gives the Secretary of State power to issue certificates. The clause is written in such a way that it sounds as though it is a statutory instrument issued by the Minister, but it is not; it is a scheme to
transfer to any person or persons such property, rights and liabilities as are specified in or determined in accordance with the scheme".
Do I take it from this that the Minister is being given power to produce a scheme without further reference to the House, because the provisions in clause 8 have the ring of delegated legislation-making powers? If that is the case, surely clause 8 should also be subject to clause 15(3). If I look at clause 15, however, I can find no reference to clause 8 of the Bill. In this question of delegated powers, it is very important that the Minister be accountable to the House and that, in a scheme like this, which gives the Minister power to hive off a perfectly proper, efficient and, in one part, profitable provision for our exporters—we have an enormous balance of payments deficit and need every possible assistance—

Mr. Dennis Skinner: The war will make it worse.

Mr. Cryer: —the Minister should come to the House and provide an account of the scheme, so that we can approve or reject it.
As my hon. Friend the Member for Bolsover (Mr. Skinner) points out, our economic position will not be improved by this war, but rather made worse. That means an even more important obligation on the Minister, who is being given power under the motion to pay the costs of the scheme, and to bring the scheme back to the House for approval on an affirmative resolution. I hope that he will say that the point will be considered in Committee, and that he will accept that the House should have proper accountability, so that he does not do just what he wants with the money in the privatisation proposal.

The Minister for Trade (Mr. Tim Sainsbury): I am sure that the House appreciates that the hon. Member for Bradford, South (Mr. Cryer) has had extremely important things to do in connection with the business of the House and the Committees to which he has referred. We share his regret that he could not be present for any of the proceedings on Second Reading of this important Bill. If he could have been present, in spite of his other commitments, I suspect that he would have found that many of the points that he has raised were answered in the debate. When he reads Hansard tomorrow with his usual care, I am sure that he will find that to be the position. If there remain any points that he feels have not been answered, I shall be happy to answer them.

Mr. Cryer: The Minister has been misinformed about my not being present for any part of the debate. That is not true. I was present for the latter part of the debate and, had there been time, I might have spoken earlier. I listened to the whole reply of his hon. Friend the Under-Secretary of State. I hope that the Minister will accept that correction.

Mr. Sainsbury: I apologise to the hon. Gentleman. lie missed an excellent contribution from the hon. Member for Cardiff, South and Penarth (Mr. Michael), which he might have found helpful.
I assure the hon. Gentleman that the matters before us have no connection whatever with Iraq. The increases in clause 6 to which he referred follow normal procedure. Incidentally, I may point out to him that the amount involved is not £35 million but £35 billion, which is a fairly substantial sum. The clause follows the normal procedure.
These matters will be examined carefully in Committee. I hope that we may have the pleasure of the hon. Gentleman's presence in Committee to ensure that they are so examined.
Question put and agreed to.

The Gulf

Mr. Tam Dalyell: On a point of order, Mr. Speaker. During your careful reply to my request at 3.30 pm for an adjournment under Standing Order No. 20 to discuss the detonation and ignition of Kuwaiti oilfields by Iraq, you said that it would indeed be a serious matter if it could be shown to be true. Alas, it is only too true, as pictures have shown the Al Wafra oilfield blazing and billowing out the blackest of smoke.
The House might also expect some response to the tragic loss of a fifth Tornado and, most urgently, because it is self-evidently a matter of extreme urgency, to the attack on Tel Aviv tonight. The Leader of the House or another senior Minister may be able to outline what the Government's response will be.

The Leader of the House (Mr. John MacGregor): It may be for the convenience of the House if I respond to the hon. Gentleman. I believe that it is premature to make a statement now. I am advised that there is no firm evidence to confirm media reports. I suggest that we make a judgment tomorrow, in the light of confirmed facts, as to whether a statement is justified.
It might be helpful if I add that we are obviously keen to keep the House fully informed. We have already amply demonstrated that. Equally, it is not realistic to expect a statement on every new incident in the Gulf as it occurs. It will be necessary to make judgments as and when the need arises to justify a specific statement. We can discuss that matter as appropriate through the usual channels.

Several Hon. Members: On a point of order.

Mr. Speaker: I am not certain that any points of order can arise out of that, but I will call Mr. Ewing.

Mr. Harry Ewing: On a point of order, Mr. Speaker. The Leader of the House has generously said that statements will be made as the occasion arises, but that the Government cannot make a statement on every incident. The attack on Tel Aviv is not just any incident. I do not need to spell out to the House or to those beyond the House the consequences which may flow from that attack. We could be overnight in the most catastrophic and serious position of all time. I hope that the House of Commons is not being denied a statement by the Secretary of State for Defence or the Foreign Secretary while at the same time they are holding press conferences outside. If that practice is adopted, in my judgment the House will wholly reject it.

Mr. George Galloway: Further to that point of order, Mr. Speaker. That is exactly the point. The entire world this evening is discussing the incredibly dramatic developments in this affair. There are flames from Tel Aviv to Saudi Arabia. There are dead people in the streets from Tel Aviv to Saudi Arabia. Why cannot the House of Commons hear from the Government their perception of what has happened, and debate it, as the whole world is doing this evening?

Mr. Max Madden: On a point of order, Mr. Speaker. Surely the key point is that it is clear from statements by the Israeli ambassador to Britain that Israel reserves the right to respond to the attack undoubtedly made upon it in recent hours. It is clear also

that the British Government are making representations to the Israeli Government, presumably urging that they do not retaliate, because if they did this would be an extremely serious escalation of the war in the Gulf.
Secondly, surely, as this is a United Nations-authorised war, the Security Council should be in permanent session to consider—

Mr. Speaker: Order. Perhaps that is so, but it is not a matter for me on a point of order. I repeat what I said this afternoon, that these are very serious matters, but the whole House has heard what the Leader of the House has said—that he will carefully consider whether a statement should be made about this tomorrow. I have nothing further to add; it is not my responsibility. Mr. Hood.

Mr. Jimmy Hood: On a point of order, Mr. Speaker. The Leader of the House tells the House that he is not in a position to confirm any of the stories that have been going round this place all day. I can tell him that American television has been running and confirming the same stories all day. It is a bit unbelievable when our Government say that they cannot confirm stories that have already been confirmed by American television. We want to know why the right hon. Gentleman cannot come to the Dispatch Box and give us some explanation of what has happened.

Sir David Steel: Further to that point of order, Mr. Speaker. As one who spent some hours the other night speculating on television about a chemical attack on Tel Aviv, can I say that it really is quite wise for the Government to wait until facts are confirmed rather than this House joining in general speculation on television and radio reports that may turn out to be unjustified? In return for that, would the Leader of the House assure us that such statements will be made regularly, daily, as required, to the House?

Mr. MacGregor: I appreciate the opening comments of the right hon. Gentleman. I think that we have to judge all these developments as and when they occur and the need arises. It would be a mistake to say that we will make daily statements to the House, because I think it is necessary to judge each of the incidents. But I should have thought that we had made it very clear by what we have done in the past week that the Government are taking every step to keep the House fully informed both of the facts and of our attitude towards them.

Mr. Speaker: Order. I do not think there is anything more that can be said about that.

Mr. Dave Nellist: On a point of order, Mr. Speaker.

Mr. Speaker: If it is a completely different point of order.

Mr. Nellist: I do not intend to refer to the substance of any points raised, Mr. Speaker, but you will recall that, on a number of occasions, when a Minister of the Crown has responded to a point of order in this way, particularly on a second occasion as in this case—first to my hon. Friend the Member for Linlithgow (Mr. Dalyell) and then to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir David Steel)—and given substantial answers at the Box—

Mr. Speaker: Order.

Mr. Nellist: No. Let me finish my point. You have treated—

Mr. Speaker: Order. The hon. Member knows perfectly well that I invited the Leader of the House—for the benefit of the House—to state exactly what the position was. That was not a statement; it was for the benefit of the House. We have very important business in front of us, and I think we should now move on. I will take one final point of order: Mr. Tony Benn.

Mr. Tony Benn: On a point of order, Mr. Speaker. My point relates not to you, Mr. Speaker, but to what the Leader of the House said. There is no doubt from television reports and from statements by the Prime Minister on television that the attack on Israel is taken gravely by the Government. The Leader of the House could well have said that he will make a statement tomorrow, in which case the matter would have been disposed of. He did make a statement—that he could not guarantee a statement. Therefore, you are inevitably brought into this, because it is your task to defend the House—

Mr. Speaker: Order.

Mr. Benn: Please do not prevent me from making my submission.

Mr. Speaker: I know, but at great length. There are other ways of getting a statement. If the Government do not volunteer a statement, applications can be made to me.

Mr. Benn: I hope, Mr. Speaker, that you will allow me to make a serious point on a day when great events have occurred, yet the Leader of the House has declined to give us an assurance that there will be a statement tomorrow.

Apart from anything else, what has happened in Tel Aviv tonight is a threat to security under the United Nations charter. There can be no doubt about that, in the light of the Prime Minister's statement. All I ask is that the Leader of the House takes seriously the points that are being made and undertakes that, tomorrow, he will invite the Foreign Secretary, the Secretary of State for Defence or the Prime Minister to make a statement. All we are asking is that a statement be made tomorrow in the light of what has obviously happened.

Mr. Harry Cohen: rose—

Mr. Speaker: No. I was not seeking to be discourteous to the right hon. Member for Chesterfield (Mr. Benn). If the Government do not make a statement, there are other means of obtaining information from the Government—applications made to me.

Mr. Cohen: On a point of order, Mr. Speaker.

Mr. Speaker: We have had enough of it. [Interruption.] Finally—Mr. Cohen.

Mr. Cohen: Back Benchers have the right to question the Executive, and that becomes more important, not less, in time of war. There should be a statement on important incidents such as happened today. I ask, through you, Mr. Speaker, as the custodian of Back Benchers' rights, that we have a statement every day in the House on the events of this war, so that Back Benchers have an opportunity to question the Government about them.

Mr. Speaker: I am sure that that will have been heard by those who are responsible.

European Standing Committees

Mr. Speaker: I have not selected amendment (a), but I have selected amendment (b) in the name of the hon. Member for Newham, South (Mr. Spearing), and amendments (c) and (d) in the name of the hon. Member for Southend, East (Mr. Taylor) and his hon. Friends. I suggest that the two motions and all the amendments are debated together and, after one and a half hours or earlier, I shall invite the hon. Members concerned to move their amendments and divide the House on them if that is their wish.

The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): I beg to move,
That the following Amendments be made to Standing Order No. 102 (European Standing Committees):
in paragraph (1), line 1, leave out 'three' and insert `two';
in paragraph (3), line 15, leave out 'ten' and insert `thirteen';
in paragraph (6), line 34, leave out 'several' and leave out the table following paragraph (6) and insert the following table:


European Standing Committees
Principal subject matter



Matters within the responsibility of the following Departments—


A
Agriculture, Fisheries and Food; Transport; Environment; and Forestry Commission (and analogous responsibilities of Scottish, Welsh and Northern Ireland Offices);


B
Other Departments


I should like to start by explaining to the House why this matter has been brought before it for the second time in less than three months. On 24 October, the House debated and approved several amendments to Standing Orders. Those amendments were made in response to recommendations from the Select Committee on Procedure and were intended to improve our system of scrutiny of European Community legislation.
The main change agreed was the establishment of three new European Standing Committees, whose members would be appointed for a whole Session and in which scrutiny debates would be held.

Mr. Teddy Taylor: Does the Leader of the House accept that the Select Committee on Procedure recommended five Standing Committees, not three? It agreed to the Government's proposals only on the strict assurance that the Government would consider increasing the number.

Mr. MacGregor: The Procedure Committee proposed five Committees, but I should like to explain why I am bringing forward these proposals tonight.

Mr. Taylor: Please do.

Mr. MacGregor: If my hon. Friend will allow me, I have hardly started and I am coming to his point. We have only a brief time for the debate, so I would like to explain as quickly as possible the Government's attitude to the amendments.
Unfortunately, as hon. Members know, the Committees have not yet been appointed. The effect of that has been that since the start of the Session all scrutiny debates have had to be held on the Floor of the House, directly contrary to the Procedure Committee's intention that fewer debates should be held on the Floor of the House and more should be in Standing Committees. That point is highly relevant to another issue that has been raised with me by a considerable number of hon. Members on both sides of the House—the hours of the House and, in particular, late-night sittings.
Three months ago we ran into some difficulties about the composition of the Committees as originally agreed by the House. As it is a House matter and I was keen to proceed on an agreed basis, I engaged in further consultations. It is as a result of those that the Government have now revised some of the proposals which are the subject of this debate. I very much hope that those will find favour on both sides of the House as I am keen to put an end as soon as possible to the delay in establishing the new system for both the reasons that I gave.

Dr. Norman A. Godman: In the opinion of the Leader of the House, is the division of responsibilities between Committees A and B a fair division of labour?

Mr. MacGregor: I am coming to that. It is the best division of labour that we can establish at this stage. I shall also make it clear that we shall review the position in the light of some experience of the working of the system.
The revised proposals are that, instead of three Standing Committees of 10 members each, there should be two Committees of 13 members each. Under the formula for having regard to the composition of the House, each Committee will comprise seven members from the Government side, five members from Her Majesty's Opposition, and one from the minority parties. The Chairman will come from the Chairmen's Panel.
As the Committees are subject-based—here I come to the hon. Gentleman's point—this change necessarily entails a reallocation of subject matter between the Committees. Standing Committee A, which under the original proposals dealt with agriculture, fisheries and food and environment, will now also cover transport. The second Standing Committee will include trade and industry with the other Departments already covered.
That is the extent of the Government proposals before the House today. The other motion on the Order Paper is in effect consequential on the main motion. It simply reallocates those documents which currently stand referred to one of three Standing Committees between the two Committees that we now propose. I recognise that, with only two European Standing Committees, there will be a heavier work load on each of them than under our earlier proposals. That is something that I shall monitor carefully, and at an appropriate time we might take stock. In the light of—

Mr. Hugh Dykes: Will my right hon. Friend give way?

Mr. MacGregor: Perhaps I may finish my sentence first. In the light of what the Procedure Committee recommended, the facts that it considered and the experience of the previous two parliamentary Sessions,


and making a judgment about the documents which are considered on the Floor of the House and those which go to a Standing Committee, it seems likely that each Standing Committee will have about two sittings per month. But that is a matter that we shall monitor.

Mr. Dykes: I thank my right hon. Friend for giving way and for his explanation of these matters. Does he not find it ironic that, although certain hon. Members shrieked hysterically about the importance of scrutiny and thorough coverage of these matters, the generality of hon. Members on both sides of the House have shown so little interest in the exercise that it has been impossible to continue with the original plan and structure? Does he further agree that that also inevitably means that the Select Committee on European Legislation, of which I am a member—and of which other members are present on both sides of the House—will refer fewer matters for debate in the Standing Committees because of the reduced structure?

Mr. MacGregor: I have brought forward revised proposals, not because of lack of interest in the House but because, in the light of further consultations with various parties in the House, it seemed that that was the best way to proceed on the composition of the Committees and other matters.
I do not think that more will be taken on the Floor of the House. I have just given the type of work load that I think that Committees will have. The proposal will mean closer and more expert scrutiny of some of the documents that come before the House, because not only will the membership of the Committees be able to build up expertise over a period, but it will be posssible for any hon. Members with a particular interest in a document to participate in that Committee's work. Therefore, taking this step will enable those who wish to take an even closer interest. Under the proposal, the relevant Minister will be subjected to an hour of questions in the Committee before the one and a half hour discussion by the Committee. That is something not available to the House at present, which is why the steps will aid those many Members who take an interest in such matters.
Work load is one of the issues that we shall monitor carefully and, at the appropriate time, review.

Dr. Godman: Will the Leader of the House give way?

Mr. MacGregor: It would be better if I moved quickly now, because I want hon. Members, particularly those who have tabled amendments, to have the opportunity to make their case.
As there are only six months or so remaining in the current Session, I am anxious above all that the Committees should start their work as soon as possible, so that we can get some experience of how the new system works and also because the Committees will help to relieve the pressure for late-night debates on the Floor, as many hon. Members have been urging me to try to do in recent weeks.
It may be helpful to the House and assist our discussion if I now turn briefly to the amendments accepted for debate tonight. Amendment (b), tabled by the hon. Member for Newham, South (Mr. Spearing) proposes raising the quorum for the Committees from two to three. Since the Government are proposing increasing the size of

the European Standing Committees, I recognise that it is reasonable to raise the quorum. I therefore propose that we accept the amendment.
Amendment (c), in the name of my hon. Friend the Member for Southend, East (Mr. Taylor), seeks to give any hon. Member the right to propose amendments to motions debated in the Standing Committees, whether or not he or she has been nominated as a member of the Committee. I am advised that the amendment is unnecessary, because all hon. Members already have that right. The Standing Order says that those not nominated to the Committee may not vote, move a motion or be counted in the quorum, but it does not stop them from moving amendments to a motion. I hope that my clarification is helpful to my hon. Friend. I can reassure my hon. Friend that even if he or anyone else is not appointed to one of those Committees, he or any other hon. Member will be entitled to attend, speak, and move amendments. I hope that on that basis and with that reassurance my hon. Friend will be content to withdraw the amendment.
However, the Government cannot accept amendment (d), also in the name of my hon. Friend the Member for Southend, East, which would completely change the character of the new Standing Committees. The Standing Committee meetings will allow the Committee members, and any other hon. Members who wish to attend as I have stressed more than once, to question the Minister and to participate in the debate thereafter. The Committee may also amend the motion before it. But there is no mechanism for it to arrive at a separate set of conclusions, and it would be quite wrong to expect any Standing Committee—as opposed to a Select Committee—to be able to do that. Such an arrangement could not be contemplated without re-drawing the whole system. I therefore hope that my hon. Friend will not press the amendment, because I cannot accept it.
The new arrangements will allow more effective scrutiny in Committee, so it is crucial that they are now able to get under way and have a chance to work. The Government have undertaken to review the new arrangements at the end of the first Session of operation, and unless they are set up soon, there will be rather limited experience on which to base our review. I commend the motions and amendment (b), in the name of the hon. Member for Newham, South, to the House.

Mr. George Robertson: I appreciate that the Government faced a dilemma and that, after consultation following the previous debate and votes on 24 October 1990, it became necessary to reconsider the matter, although I may have reservations about the conclusions drawn. After the detailed and worthy deliberations of the Procedure Committee and the alternative recommendations proposed, the House may be disappointed at the way in which the experiment has turned out. However, that sadness should not be allowed to delay the matter any further. The important thing is that the Committees be up and running as soon as possible so that we may be able to examine their effectiveness in the light of experience.
Although events outside this House—indeed, outside this country—preoccupy us, we should be conscious of the fact that we are considering matters that are of acute


importance to the country and to the future well-being of many of its people. That applies especially to European legislation.
I accept that we should now go ahead with this experiment. We must make it as successful as possible and, in the light of experience, come back to the matter, perhaps with guidance from the Select Committee. We might then consider whether there were better ways of proceeding.
The number of Committee members is not the important matter, nor is the subject matter to be dealt with; the important matter is the depth of scrutiny. All too often it is forgotten in the country that much of the European Community legislation that comes before this House—often obscured by technical descriptions—is primary legislation affecting the daily lives of citizens. We get excited, quite rightly, about primary legislation in the form of Bills, but we should recognise that European Community legislation can be just as important, and its implications just as direct.
The key to the success of these two Committees and of whatever results from their deliberations will be the opportunity to cross-examine Ministers in respect of their wide and pivotal role as European legislators. Indeed, the experiment will stand or fall by the ability of the Committees to make Ministers accountable in respect of that role. That being so, I want to put to the Minister questions about a number of matters that still puzzle me. He may care to return at the end of the debate to these matters.
Non-members will have the right to attend and now, the right to move amendments. What right will they have when it comes to questioning a Minister? Will priority be given to members? Will others be accorded equivalent rights during cross-examination? My particular reason for putting these questions is that I am concerned about the role of Front Benchers. It is not entirely clear to me whether Ministers will be full members of the Committees. If not, who will be responsible for the legislation? Currently, a Minister is responsible for each item of European legislation and has to steer it through. If the Minister is not to be a member, who will carry that responsibility? On that will hinge the role of Opposition Front-Bench members.
We should not lose sight of the fact that, as much European legislation is of a technical nature, the technical expertise of both Front Benches will be needed. I hope that the Minister will be able to clarify that important matter.
My second question is about the servicing of the Committees. We are creating a new organism. At the moment, we have Select Committees, the members of which are given an expert and able service by the Clerks Department, on an all-party basis, and that makes their effectiveness much sharper. We also have Standing Committees, in which, apart from the procedural aspect, all servicing is provided for Ministers and hon. Members of the party in government, and nothing is offered to the Opposition. How does the Leader of the House see the Clerks Department being involved in the servicing of the Committees? Will it be provided on a basis closer to that of the Select Committees than that of the Standing Committees?
In the sequence of cross-examination, will measures come before the Committees following recommendation

from the Select Committee on European Legislation, or will there be opportunities for the wider issues, involving the subject matter of these Committees, to be debated, bringing Ministers before them? Will that be precluded by the Standing Order, or is it within the province of the Select Committee on European Legislation?
Having reduced the recommendation from five to three Committees and now to two, we are within one Committee of the concept of a European Grand Committee, put forward by my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) and me in our evidence to the Select Committee on Procedure. It did not find favour in the Committee, but it is interesting that, in the practical world, we are almost down to that, although the suggested membership of 26 is too small to do justice to the concept that we designed.
I draw the attention of the House to the fact that the Minister of State, Foreign and Commonwealth Office is already starting an initiative designed to consult Members of Parliament and others about various matters, and this should be welcome. We should not stop with one means of scrutiny, as this matter is of enormous importance. We should continue to look at ways in which the House can examine European legislation in much greater detail.
As a Member of Parliament representing a Scottish constituency, and knowing the strength of feeling in Scotland and among my colleagues representing Scottish constituencies about the fact that the Leader of the House is spending so much time trying to find a useful and relevant model of Committee to consider European legislation, I express my personal regret that we are now embarking on this experiment before forming the Scottish Select Committee, as the House has an obligation to do.
It is right and proper that we should be looking at the European experience and creating institutions to mirror its importance to the House and the country, but it is a scandal that we still have not managed to deal with the domestic problems foisted on the Leader of the House by his right hon. and hon. Friends. That means that the House of Commons still does not have that important Select Committee.

Mr. Deputy Speaker (Mr. Harold Walker): Order. That has nothing to do with the matter before the House. I remind the hon. Gentleman and the House that we are discussing amendments to Standing Order No. 102, and his points have nothing to do with that.

Mr. Robertson: I accept your ruling, Mr. Deputy Speaker. I thought that it was relevant to draw a contrast between the successful experiment and the failure. If you say that that is not in order, you must be right.
I draw my remarks to a conclusion by saying that while we may have regrets or reservations about the way in which the debate is going, it is the light of experience that will guide us. The sooner the experiment is up and running, the sooner we will have the facts on which to make a judgment.

11 pm

Mr. Teddy Taylor: The proposals that the Government are advancing after the very short debate that we had on 24 October are an insult to the intelligence of the House of Commons and a grave insult to our democracy and our right to consider legislation.
My right hon. Friend the Leader of the House put forward only two arguments in favour of what he wants to do. First, he said that people were complaining about the late-night sittings on European legislation. I am sure that people do complain about having to come here after 10 o'clock, sometimes after midnight, to debate important Euro-issues, particularly when the public have not the slightest idea what is happening because tonight none of the organs of the press is present to hear what we are discussing. That may indeed have been one of the reasons.
If my right hon. Friend wishes to ensure that more Members pay more attention, if he wants the people of Britain to know what is going on, would it not be possible for the Government to have, say, one day a week to consider these vital Euro-measures? It is difficult to say that, because they are considered after 10 o'clock, we have to find another opportunity, when the Government know that they could take action in other ways.
The second matter is rather important. It concerns the way the Government have treated the issue in appointing two Committees. The Minister said that the original proposal was for three Committees. I have the pleasure of pointing out to him that the excellent Select Committee led by my right hon. Friend the Member for Honiton (Sir P. Emery) had said that one needed five Committees to look at this issue. The Committee looked at the matter objectively, sat for a long time, and came to the conclusion that five Committees were needed to do this kind of work. The Government on reflection, having considered the matter, said no, they wanted three Committees. It seems that this was accepted reluctantly on the strict understanding that the Government would consider increasing the number. Now the Government have come back proposing just two Committees to consider a full range of desperately important legislation affecting every one of our constituents.
My right hon. Friend the Leader of the House explained that there had been consultations between the usual channels. My hon. Friend the Member for Harrow, East (Mr. Dykes), who is always helpful on these matters, said the reason was that nobody appeared to be interested in taking part. Who was consulted? I can assure the Leader of the House that, on the basis of those whom I know to be true democrats and who are interested in looking after the liberties of this country, I could have filled up five Committees simply by asking my friends. I would ask my hon. Friend the Member for Harrow, East whether anyone else in the House has been approached about this. Has my hon. Friend the Member for Billericay (Mrs. Gorman), who is sitting next to me, been asked? I am sure that she has not. Indeed, has anyone on this side been asked? Has anybody in the Labour party been asked?

Mrs. Fyfe: May I ask the hon. Gentleman to make the same effort in relation to forming a Scottish Select Committee?

Mr. Taylor: There is certainly a case for having more of these Committees. Today we are discussing the European Committees, which examine legislation that affects us all. The repeal of legislation is also required.

Mr. James Wallace: I should put it on record that there were sufficient Members from the minority parties willing to take up the one place

allocated to them on each of the Committees, to such an extent that some members of the minority parties were disappointed that they could not get on them.

Mr. Taylor: I can understand why some Members from the minority parties are disappointed. No doubt they have tried to serve on Committees. This is a sickening aspect. The House should be aware of the only occasion in my 25 years here when I asked to be a member of a Committee. I wrote asking to be on the Committee dealing with consumer protection because there were important matters affecting my constituents. The Minister knows to whom I wrote and that I regarded the matter as important. I was told that it was very sad but as there was a huge demand to attend that Committee, it was not possible to fit me in. Nevertheless, I went to the Committee and sat through every sitting. Three members came to me and said that they had been press-ganged to go onto it.
What sickens me is that, instead of this legislation, which vitally affects all our constituents, being properly considered by the House of Commons, it will be shoved into Committees, on to which no doubt once again Members will be press-ganged. To show balance, we shall probably have one of the delightful people from the Bruges group.

Dr. Godman: Given the customary sparseness of attendance at debates such as this, I find it difficult to believe that the hon. Gentleman could find enough right hon. and hon. Members to staff five Committees. Is he not being a little idealistic, and is there not much more sense in his proposal that one day a week should be devoted to EC matters?

Mr. Taylor: The hon. Gentleman is right. It is ridiculous to shove these matters into quiet Committees composed of people press-ganged into serving on them who will simply go bang, bang, bang and approve things. Everyone else will say that they know that the European legislation is important but because two important Committees are looking at the matters first they will switch off and say that they have done their democratic duty. If the Leader of the House wanted to ensure that the British people knew what was going on, if he wanted to ensure that democracy would be preserved, he could have allowed one day a week to discuss these measures in prime time so that people would know about them.

Mr. Haselhurst: Is not my hon. Friend overlooking the fact that any hon. Member is entitled to attend the Committees, so if his view is correct, a whole gang of people could turn up, play a full part and carry out the scrutiny that they felt might not be carried out by those officially appointed?

Mr. Taylor: That is the most ridiculous argument that I have ever heard. My hon. Friend says that any Member can go along, and the Leader of the House says that any amendment can be moved, but I am not sure exactly how that will be done when other amendments will no doubt be pressed. Will all hon. Members be able to go along and have status without the ability to vote or to take a meaningful part in the discussions? How will we be notified of such Committees? Has my hon. Friend ever looked at Euro-legislation? There are 30 documents awaiting consideration now. Is it suggested that every hon. Member


will go to the Table of the House, get all that information and look at it? My hon. Friend knows that all we are doing under this proposal is switching off.
If my hon. Friend doubts that, he should consider what has happened under the leadership of the Leader of the House to hon. Members' ability to get information. The Leader of the House was formerly a Minister for Agriculture, Fisheries and Food and I am sure that he looked after farmers well. In the old days, we had food mountains and people asked questions about them. Happily, because of a Conservative initiative, they were wiped out. Now, unfortunately they are going up again, and people might want to know about that.
If any hon. Member tables a question today about the size of the food mountains he will find that, instead of being given an answer, he is referred to the database in the Library—a new development, which simply means that the information is not made available to the public. The database people will then say that there are different ways of looking at the matter. What about the trade figures? They are very important to our democracy. Last year and the year before, we used to be able to ask questions about trade with Germany or the EC. Try doing that today. Again, hon. Members will be referred to the database.
What really worries me, as every hon. Member here tonight must know, is that all these vital issues affecting all our constituents, important issues about the control of EC spending, will simply be referred to two quiet Committees and everyone else will be able to switch off. That is terribly wrong.
I have tabled an amendment which I thought might be helpful. If those public-spirited Committees are to look at all the legislation, they might want to tell us something. For example, they might think that an agricultural policy document was heading us for a crisis. They might take the view that the law was not being observed. They might take the view that proposals on equal treatment for men and women would create a problem for British industry. How would they make their views known? The Minister said that that would not arise in a Standing Committee because detailed amendments are moved, proposals are put forward and arguments are made. The core Committees cannot move amendments to European legislation. They do not have the same power at all.
What on earth is wrong, after the Committees have deliberated for two or three months, in their saying that they have come to certain conclusions about which they want the House to know? What on earth is wrong with that when these are not normal Standing Committees?
We are doing a shameful thing tonight. The Leader of the House may remember that, on 24 October, this motion and four others were discussed for one hour. Mr. Speaker told the Government that, if they felt that the time available was too short, they did not have to move all the motions. Now we are having a debate again at a time when no one will be aware of it, in which we are simply saying that this mass of legislation will go to two Committees which will have to cover all their work—an impossible load, considering that we have been told that we ought to have five Committees to cope with it. I honestly believe that what we are doing tonight is shameful. It means that we can all switch off. It takes away our role in examining legislation.
We know that European legislation is not always considered on its merits. Sometimes there is horse trading. We have a duty to let people know what is happening.

Mr. Tony Favell: If the Executive suggested that legislation emanating from the Government rather than from Brussels should be treated in this way, the idea would be laughed out of court.

Mr. Taylor: That is so, as the Minister knows. Things happen in fishing, but what can he do about it? What questions can he ask? We do not have the right to switch off. Most of us will forget about this; we do not need to trouble about it any more. We do not need to ask ourselves whether it is our duty to come along at 10 o'clock to talk about these matters. We have a social charter. We did not sign it, but, as hon. Members know, all the matters are going through under the Single European Act and it will affect every firm in our constituencies. Do we not have a duty to offer advice? We have that duty, and if we are to be fair to our constituents, we must therefore consider this matter.
We should reject the motion and ask the Government to give us a day—any day of the week—when we can discuss these issues, and not after 10 o'clock at night. We must tell the Government to stop encouraging us to switch off, and to stop preventing the people of Britain from knowing what is happening. The Government must stop the conspiracy of silence which is almost becoming part of Government policy, as the Leader of the House well knows. Let us reject this ridiculous proposal and have a day to discuss the important issues which affect us all.

Mr. Nigel Spearing: I beg to move amendment (b). On behalf of the Scrutiny Committee, I thank the Leader of the House—

Mr. Deputy Speaker: Order. I hesitate to interrupt the hon. Gentleman, but it would be inappropriate for him to move his amendment now in the light of the advice given by Mr. Speaker. It might be more appropriate for him to move it at the end of the debate.

Mr. Spearing: I apologise for that procedural slip. Sometimes one sees in Hansard such words that are not actually said, so I thought that I would say them. I will nod at the appropriate moment at the end of the debate.
I was about to thank the Leader of the House for his gracious acceptance on behalf of the Committee. I shall show in a moment how amendment (b) reveals some of the difficulties to which he alluded, but before I do so, I should make one or two points about the speech by the hon. Member for Southend, East (Mr. Taylor). I understand his concern, but I think that the forebodings are rather different and are shared by Members on both sides of the Scrutiny Committee, and not simply by those with one particular view of the European Community.
For the past 15 years it has been up to any hon. Member of the House to attend such Committees, and unless the Standing Orders have been changed—I do not think they have—any hon. Member can move amendments. Amendments can also be moved when the matter comes back to the Floor of the House, albeit forthwith. If the amendment is selected, there can be a Division.
It is up to the hon. Member and his hon. Friends to go to Committees and to table amendments which take a view


of the document concerned. Those amendments can be accepted on the merits of their effect on particular constituencies, and can result in a motion on the Floor of the House. Indeed, for the first hour, an hon. Member can question the Minister on that document. That is the main feature of improvement in this package.
Having said that, the package—apart from the hour for questions, on which we are all agreed—is a step backwards. The Select Committee thought the same. The idea of having a quorum of three for a Committee of 13 illustrates my argument. Such a small quorum would show that something was wrong.
We told the previous Leader of the House, the right hon. and learned Member for Surrey, East (Sir G. Howe) that the changing of the polarity or automaticity of putting everything in Committee unless moved by a Minister of the Crown on the Floor of this Chamber was risky and taking things too far. In particular, instead of having one-off Committees as we do now—horses for courses, chosen by the Selection Committee—we are to impose an extraordinary load on the members of two Committees, or of the five Committees originally proposed by the Procedure Committee, whose Chairman may catch your eye shortly, Mr. Speaker. We are not clear about better scrutiny in toto, because there will be two eyes to the needle, which will be restrictive to some extent.
Whatever views right hon. and hon. Members may have on the merits of the proposal, they should be aware of the question of publicity, which was mentioned by the hon. Member for Southend, East. The Leader of the House will correct me if I am wrong, but 1 recall that his predecessor gave an undertaking that the Thursday business statement would contain an additional statement on the Committees due to sit the following week. Let us hope that the media, who are rather variable in their attendance at Committees, will publicise that information. It would also appear on the Order Paper, which would serve to inform right hon. and hon. Members, who could enter the dates in their diaries. That would be of added help, and it is a pity that that procedure is not followed already.
We may sometimes think that Bills are complicated, but they have a logical order. However, some legislation is not easily understood at first sight. There might appear in the middle of a document a table containing an alteration that could have an enormous impact on an individual industry, firm, or type of crop, yet that might not be immediately discernible. That is why the Scrutiny Committee attempts to report to the House the likely impact that such a proposal might have, without necessarily saying whether we think it is good or bad.
The Government's new procedures will be improvements only in so far as the questioning of Ministers is concerned. With television coverage and improved publicity, it is just possible that it may offer a net advantage over the existing conventions. However, I sense that there will still be personnel problems. The Select Committee on European Legislation expressed concern about that aspect right from the start. We conveyed that concern to the right hon. and learned Member for Surrey, East. The Government's response to the report of the Select Committee on Proceedure, Cmd. 1081 of May 1990, stated, in recommendation 19, in respect of the recommendation for five Committees that

it would be difficult to find sufficient Members with the relevant interest or expertise to man five Special Standing Committees. The Government therefore propose initially that three Special Standing Committees should be established".
We know that proposal has run into trouble.
When the Leader of the House undertakes the review promised by his predecessor, I hope that he will consider not just the procedure that may operate in Committee in respect of questions and the attendance, no doubt, of the hon. Member for Southend, East and his hon. Friends, but the question of membership. My hon. Friend the Member for Tottenham (Mr. Grant) has indicated his interest, as have other noble volunteers, in serving on such Committees in order that the necessary quorum can be reached.
I am not sure that it would redound to the credit of the House if 20 or 30 right hon. and hon. Members turned up at such a Committee and, quite rightly, started questioning the Minister and he failed to give satisfactory answers. Is that not what Parliament is all about? The Minister then runs to earth in some foxhole, people literally jump up and down, and the Chair must maintain order. Then the Question is put, and it is carried by two votes to one. Imagine how that would look on television. I am not. saying that that will happen, but under the present Standing Orders it is possible.
Perhaps in the review we should consider not merely what has happened, but what could happen. I advocate consideration of the idea of a one-off Committee for each batch of documents—we try to batch them together so that we can get through a lot of them as efficiently and effectively as possible. If these Committees work reasonably well, the Selection Committee may not run into the sort of timetable and selection troubles that they have run into so far. I hope that that is true, because, when questioned by our colleagues in the EEC, we have already had to admit that, as a Committee, we had the power to make recommendations on the Floor of the House or in Committee and the Government accepted that but the power of the Committee to make recommendations has now gone.
Until these amendments are made, there will be a decision at 3.30 pm on whether the Committee is held on the Floor of the House or upstairs. That decision will now lie wholly with the Government. In another Parliament, or if there is a balance of hon. Members on a particular document, it will be possible for a number of hon. Members to stand up and ensure that the matter is dealt with on the Floor of the House. These may not necessarily be party political matters, or anything to do with the merits of the EC establishment.

Mr. Favell: rose—

Mr. Spearing: I shall be courteous and give way to the hon. Gentleman.

Mr. Favell: The hon. Gentleman is a great expert in his field. Can he tell the House how wide a trawl there was in his party about whether it was possible to man three Committees as opposed to two? I and other Conservative Members are not sure why there was a sudden change of mind from three Committees to two. Was it because there were not enough Opposition Members to man the Committees and if so, can the hon. Gentleman throw some light on that?

Mr. Spearing: I have no knowledge about that. The difficulties about numbers were foreseen by the Select Committee on European Legislation. We have been monitoring what Committees have been doing for 15 years. The hon. Member for Stockport, and various other hon. Members, considered the problem and foresaw the difficulties, which may or may not be within one party. Perhaps there would be such difficulties under any Government and with any Opposition. I do not think that the hon. Gentleman's question is relevant to me, or that it tackles the real problem, which is whether all Committees are made up of volunteers to make up the necessary quorum, or whether Committees are selected for the job in hand. I should have thought that, in principle, and wherever possible, the House would have preferred the latter.
We look forward to supporting these new arrangements, although they fall short and, in some respects, step backwards. Let us hope that experience will enable the House, at some future date, after the review and possible further adjustments, to take two steps forward.

Sir Peter Emery: Please excuse me if I croak, Mr. Deputy Speaker, as I have a rather severe cold.
I am pleased that the hon. Member for Newham, South (Mr. Spearing), who is the Chairman of the Select Committee on European Legislation, has tabled the amendment about the quorum. I should have had great pleasure in supporting it with him, and I am delighted that his wisdom has persuaded the Government to move in that direction.
I welcome the desire of both the Government and the hon. Member for Hamilton (Mr. Robertson), that the Committees should be up and running as soon as possible.
The wisdom of the House must obviously be greater than the judgment of the Select Committee, but if the House is to adopt the Government's recommendations tonight—these Committees need to start working in some form or another—we should study some of the bases upon which the recommendations were made by the Select Committee, as they are being overlooked.
When the Procedure Committee suggested that there should be five Committees rather than one large Grand Committee, as suggested by the hon. Member for Hamilton and his colleagues, we were keen to establish a number of points. First, we wanted to ensure the involvement of specialists—people with a specific interest in the subjects with which the Committees would deal—and also of volunteers who would be willing to spend at least a year considering such issues.
We judged that, if a host of subjects were dealt with by a single Committee, the volunteers would not be interested; the establishment of five Committees to deal with agriculture, trade and industry, Treasury, customs and excise, transport and the environment, would attract specialist volunteers, and we would not have to incorporate pressed men.

Mr. Ian Taylor: Would the specialists include MEPs? As fellow parliamentarians, they are interested, as we are, in the procedures of democratic scrutiny.

Sir Peter Emery: We did not make such a recommendation, because giving MEPs exactly the same role as British Members of Parliament would mean

changing the whole structure of the constitution of the House of Commons. The approach of the Procedure Committee is fairly pragmatic: we try to make recommendations that have a chance of being accepted by the House, rather than recommendations which may in theory be desirable but which would fall at the first hurdle.
We were also anxious not to give the Committees too much work. That may sound strange, but we wanted to attract volunteers. Paragraph 68 of volume I, dealing with the scrutiny of European legislation in the Session 1988–89, suggested that no Committee would have to meet more than about 10 times a year. We thought that even busy Members of Parliament could be persuaded to volunteer, and to take an interest in the subjects with which they were dealing. We gave consideration to the questions of expertise, numbers, work load and the time that would have to be spent; we believed that a link could be established between the departmentally oriented Select Committees and the European Standing Committees, with a member of, say, the Agriculture, Treasury or Transport Select Committee also serving on a European Committee.
In the debate before Christmas, the Government suggested starting the experiment with three Committees rather than five. I said then that we would go along with that, but suggested that, if it did not seem to be working, we should have the option of returning to the original idea. What worries me is the likelihood that we shall not achieve the degree of specialisation that we want, that the work load will be too heavy and that the desired relationship with the departmental Select Committees will not be achieved. All those factors may well mean the failure of the experiment. That worries me very much indeed.

Mr. Favell: May I ask my hon. Friend whether he has had any explanation of why the Government are now moving from three Committees to two?

Sir Peter Emery: I am afraid that that is a question that the Government must answer, not the Chairman of the Select Committee on Procedure. I know of no other reason than those given by my right hon. Friend the Leader of the House this evening.
We will therefore have two Committees which are really quite different from those envisaged by the Procedure Committee. Having said that, I want to return to what I said at the beginning, that it is better to get some Committees up and running and to deal with this matter rather than to delay it any further.
May I therefore ask my right hon. Friend the Leader of the House, when he replies to the debate, to restate his assurance that, at the end of the Session, in the summer or perhaps in October—

Mr. Andrew Rowe: It seems to me that what my hon. Friend the Member for Honiton (Sir P. Emery) is suggesting is that the membership of these Committees could usefully be much larger. There should then be a rule that not more than a certain number could sit at any one time. This would allow the specialists to be called in on specialist subjects. Would this not be one way of dealing with the very real problem that my hon. Friend has outlined?

Sir Peter Emery: I partly follow what my hon. Friend has said: that is another line of approach, and not one


taken by the Procedure Committee. As I know that other hon. Members wish to speak, I will not go down that particular valley at the moment.
I would, however, ask my right hon. Friend to give us an absolute assurance that, at the end of the summer, when we have seen some of the work of these Committees, he will look at them again, because when we compare two Committees of 13 members each, making 26 in all, with three Committees of 10 members each, making only 30 members in all, the membership argument seems to be slightly weak—although I accept that there may be some problems with the division of members of the Committees as regards the different parties in the House. We need the absolute assurance that, if this experiment appears not to be working as well as it might, the whole concept will not be rejected, because we have moved so far from what was originally recommended by the Procedure Committee.

Dr. Norman A. Godman: Both the hon. Member for Stockport (Mr. Favell) and the hon. Member for Southend, East (Mr. Taylor) put a very difficult question tonight concerning the quality and quantity of consultations which had taken place within the parties about the membership of these committees. It may be the case that the only party which has had such a series of discussions is the Liberal party—and, characteristically, its Members are absent from this debate. I have not been involved in any such consultations, and that is a problem common to both major parties in the House, whatever may have happened in some smaller parties.

Mr. John D. Taylor: In reply to the hon. Member's query, I can say that there has been full consultation with all the minority parties, including the SLD.

Dr. Godman: I am pleased to hear that. I look forward to regular attendance by these hon. Members at the Committee meetings. That will be the proof of the pudding when it comes to their interest.
Initially, I sympathised with the idea of five. Committees, but I just cannot believe that we could find in this place the hon. Members with the qualifications outlined by an earlier speaker. In my seven and a half years in the House, I have always noted the sparse attendance at these debates.
While I have some sympathy for the proposal by the hon. Member for Southend, East (Mr. Taylor) that we devote a day each week to European Community matters, I still do not believe that there would be a large attendance unless we were dealing with controversial issues. There is still massive indifference here to the European Community, despite the fact that we now have in Brussels, among other things, a supreme court where the English and Scottish legal systems are covered, and that this House, along with the other 11 national legislatures in the EC, cannot impose upon the decision-makers in Brussels the necessary democratic checks and restraints.
All hon. Members, whether pro-integration or anti-integration, should be demanding checks and balances to be instituted formally in this House and in the other 11 legislatures. Failure to do that will accelerate the continuing diminution of power. We should be doing something about that. I am not speaking as someone who detests the European Community. In my part of Scotland,

we have benefited considerably from some Brussels decisions, but it is essential for us to acquire the power to which I have referred.
The proposal for five Committees is a fine ideal but utterly unattainable, given the massive indifference to which I have referred. We should be talking of three Committees. Again, that might be a difficult objective to achieve.
Earlier, I asked the Leader of the House about the fair division of labour between the two Committees. Considering the spread of responsibilities, I have difficulty in accepting the provisions on the qualifications of members. I suspect that members will be chosen on an ad hoc basis and that there will not be tough selection criteria for membership.
My hon. Friend the Member for Hamilton (Mr. Robertson) asked the Leader of the House about the precedence to be given to hon. Members in the questioning of Ministers. That privilege should be given to the members of the Committee. If it is not, come a controversial subject and the appearance of a Minister to be cross-examined, hon. Members who are assiduous attenders of sessions may be pushed to one side by a gang of hon. Members who are anxious to be picked up by the television cameras.

Mr. Bernie Grant: Privy Councillors.

Dr. Godman: My hon. Friend suggests Privy Councillors. Priority must be given to members of the Committee.
For the reasons already outlined, I sincerely hope that the two Committees are a success in the very important work which they have to carry out on behalf not only of the House and its largely indifferent Members but of the people whom we represent in our constituencies.

Mr. David Harris: I strongly support the Leader of the House in his motion tonight, because I want to see the House scrutinise European legislation far more effectively than it has tried to do in the past. I make common cause with my hon. Friend the Member for Southend, East (Mr. Taylor) on that point. How many times have I sat in this Chamber when we have had the late night debate about which he has complained and said that the whole process was a farce?
There will, of course, be problems with the new Standing Committees. I should like to go further than the proposals we have tonight. I have always thought that these Committees should have their own Chairmen rather than these being drawn from the Chairman's Panel. That would give them greater coherence and enable them to have a much bigger public impact, just as Select Committees are having a bigger public impact.
My hon. Friend the Member for Southend, East was crude enough, perhaps, to say that some people would be press-ganged to serve on these Committees. I have certainly made it known to certain people that I should be very happy to serve, and I think that others would do the same. But there would be a problem here. You would quickly rule me out of order if I referred to last night's debate, Mr. Deputy Speaker, but there is a problem about manning the Committees of the House which has perhaps been ignored up to now. Without going into details, perhaps some hon. Members were rather surprised to find


themselves being nominated for a particular Select Committee, possibly in contravention of Standing Order 104. I will not weary the House or labour the point, but there is a problem.
I therefore think that the proposal before the House tonight that we should have two Standing Committees, although I would like to see three, is a realistic one.

Mr. Dykes: Does my hon. Friend think it is a good idea that members of the EC Scrutiny Committee should not be members of these two Standing Committees, even if they choose from time to time to attend them?

Mr. Harris: I am quite happy with the present proposal to exclude them, because they are not being debarred from giving these new Standing Committees the benefit of their considerable experience. I envisage a situation in which, for example, the Chairman of the Scrutiny Committee, given his intense interest in these issues, will come along to one of the Standing Committees and make known his views and the views of his Committee.
My hon. Friend the Member for Honiton (Sir P. Emery) is absolutely right: we have not got a perfect situation by reducing the number of Standing Committees to two, but it is a darn sight better that what we have had up to now, and I think that the House, at the end of this debate, should give the authority for the establishment of those two Committees and let them make a good job, in spite of all the difficulties, of the very important task in front of them.

Mr. Alan Haselhurst: I hope that my right hon. Friend the Leader of the House will take careful note of what is being said in the debate, because he is acute enough to realise that there is a degree of questioning right across the House about whether we are anywhere near getting our procedures right for scrutiny in all its aspects.
I want this proposal to go forward tonight. It is more modest than I would have liked and I think that, if it is to work, and if we are to have confidence in the improvement of scrutiny, a great deal of good will is required on all sides. Good will is needed on the part of hon. Members, to attend if they are appointed to these Committees and if scrutiny is to be effective. Good will is also needed on the part of members of the Scrutiny Committee itself to ensure that we are operating in the right spirit in the recommendations that we make as to where debates should take place.
It requires good will from the Government to recognise unease in the House. Major issues may arise from documents that merit debate on the Floor of the House. Were the Government to take a restrictive view of the number of documents that could be considered on the Floor of the House following a recommendation by the Select Committee, it would create some dismay among hon. Members. We must try to achieve the right balance. I hope that the Government will be prepared to experiment and quickly reconsider the proposal if it does not appear to be working out.
The debate has been enlarged from the modest proposal that is before us. The proposal is worth supporting if it is seen as only a start. It is at least an improvement and I am glad to speak in support of the hon. Member for Newham,

South (Mr. Spearing) who is my Chairman in the Select Committee on European Legislation. It should be better to have a Committee that has continuity than one that is appointed ad hoc to consider particular documents, and it will have the added benefit of being able to question a Minister about a document. The mechanism to improve scrutiny is available. Much will depend on the good will of hon. Members who are appointed to do the job properly and in the right spirit.
There has been a credibility gap floating like a bubble over the debate on whether hon. Members will be prepared to do their duty in carrying out scrutiny on behalf of the House. My hon. Friend the Member for Southend, East (Mr. Taylor) and his 149 friends, if he is to be believed, must be a stock that can be drawn on. Is there, by contrast, some doubt among hon. Members that the reality of attendance at debates in the Chamber and in Committee is not always what it should be? There is no point in deluding ourselves. As one or two of my hon. Friends have pointed out, much as we complain about the system, we have not always distinguished ourselves in operating the systems that are available to us.
Some adverse comment has been made about tonight's attendance, but it would do credit to some debates held earlier in the day. It has been a thoughtful debate, and I hope that my right hon. Friend the Leader of the House will take it in the right spirit and will be prepared to see it as a further chapter, and not the last word, in the way in which the House deals with scrutiny.

Mr. Hugh Dykes: I agree with my hon. Friend the Member for Saffron Walden (Mr. Haselhurst). To some extent, that indicates the natural wish of hon. Members of the Select Committee on European Legislation, of which he is a member—its Chairman, the hon. Member for Newham, South (Mr. Spearing), like the Chairman of the Select Committee on Procedure, my hon. Friend the Member for Honiton (Sir P. Emery), has contributed to the debate—that this experiment should be successful. That is important, and not for the ironic result of trying to apply strict and more profound scrutiny to EC legislation than to domestic legislation.
As my hon. Friend the Member for Saffron Walden implied, it is somewhat suprising and ironic to reflect that, on major financial legislation, the House can vote billions of pounds of new Government expenditure and Supply with only a few hon. Members paying the slightest attention, while a Commission proposal costing a couple of million ecu produces an over-excited reaction from more hon. Members, as if yet another act of rape is taking place by European Community institutions of the hapless British body politic. We must keep that in perspective.
Members of the Scrutiny Committee agree with the recommendation of the Procedure Committee and are particularly anxious that the new Select Committees succeed. We share the disappointment that has been expressed that it is a watered-down and reduced structure, although we acknowledge that the Leader of the House and his predecessor did their best in trying to get this together.
I was intrigued by the remarks of the hon. Member for Greenock and Port Glasgow (Dr. Godman) that members of the two Committees would be selected ad hoc. I surmised that he meant Members in the Tea Room who


could not get out of the door before being pounced on and having their name added to the list. I assume that the selections that are made through the usual channels, in sophisticated conversations and consultations, are more scientific and subtle than that. [Interruption.] Some of my hon. Friends suggest that that is not the way in which we will work. I am disappointed, because we should have a Parnassian procedure to achieve the right composition of the two Committees.
Although he rejected the affectionate overtures of my hon. Friend the Member for St. Ives (Mr. Harris), my hon. Friend the Member for Southend, East (Mr. Taylor) was wrong to assume that we do not share his objectives. That is where hon. Members from both sides of the House and from different parties come together. It is not true that those who have a slight sceptism at the margins about some elements of our membership of the Community—if I can put the attitude of my hon. Friend the Member for Southend, East in that way—are the only people who are enthusiastic about thorough and profound scrutiny.

Mr. Ron Brown: Will the hon. Gentleman give way?

Mr. Dykes: Not for the moment, if the hon. Gentleman will forgive me.
I know that my hon. Friend wants to have thorough scrutiny because he wants to improve the Community's legislation and make us a stronger and more integrated member of it. Thorough scrutiny is a common objective of all Members of Parliament.
In a way, we are burdened with the original, somewhat artificial, constitutional political objective. Scrutiny was introduced for different reasons from ours. We are now lumbered—if that is the right word to use—with a procedure which is on some occasions too profound for the material under consideration, if that is not too much of an irony.

Mr. Ron Brown: Will the hon. Gentleman give way?

Mr. Dykes: May I continue for a moment?
Precisely because of the original objective, we must make the Committees work. Therefore, it is essential that members of the Committees—and those who are not members, when they choose to attend—do not attend only for the ministerial interrogation and then disappear. I hope that a good number of people will attend, especially if the Committees are televised and broadcast, which would be a good thing.
If members disappear for the rest of the sittings of the Committees, the Committees will be like Standing Committees on Statutory Instruments, which hon. Members attend to do their correspondence and leave as soon as possible. There is sometimes a game to see how short the Committee can be. Everyone then agrees that the Statutory Instrument has been considered. If that happens, the Committees will be run down and will not have the significance that my hon. Friend the Member for Honiton (Sir P. Emery) and his colleagues wished when they drew up the procedures.
At least the suggestions of the Committee on the European Standing Committees were taken up by the official channels in the office of the Leader of the House more quickly than other suggestions made by the Procedure Committee over the years. That is a good sign, but it is an uneasy mixture. It is as uneasy as the mess with the

telephones. We are still waiting for the office of the Leader of the House to respond on that matter. I do not want him and his colleagues to rush excessively, but we have been discussing it for five years. It is a recklessly short period, but people are gradually coming to the conclusion that if possible—the engineers tell us that it can be achieved and they do not rush to conclusions either—we should have dedicated lines so that we can interrogate officials in the Commission and elsewhere, both British and foreign—although, of course, it is more difficult and dangerous when one is talking to foreigners—about aspects of proposed and putative Community legislation. That would also be good for the members of the Committees.

Mrs. Teresa Gorman: I preface my remarks by saying that I am one of the people who abhor the concept of the European Community loading our already overburdened legislative programme with many more regulations, which, if the Community has its way, will set in concrete almost every aspect of our national and private lives. I am torn between examining this stuff in detail in several Committees, or doing as the French do—nodding it through and then operating it to suit ourselves—or as the Italians do—nod it through and then ignore it. But we always like to do things properly in this country, so we must examine this stuff and in some respects modify it. I entirely support my hon. Friend the Member for Southend, East (Mr. Taylor) in his desire that it be properly scrutinised.
I am worried by the idea that we should staff the Committees with experts. It was suggested that the reason why we could not have as many Committees as originally planned is that we cannot find enough experts. Heaven forbid that we should have these regulations, which a re bureaucratic nightmares, scrutinised by teams of experts. Surely the whole concept of this place is that it should be a jury of everyman, putting a common-sense view of what the legislature would thrust on us.

Dr. Godman: I must have explained myself in an obscure way. I am cynical enough to believe that we would never find enough volunteers for three Committees, let alone five.

Mrs. Gorman: I thank the hon. Gentleman for his intervention. I am one of a number of people present to whom the idea of serving on the Committees has never been mentioned. It may well be that I am known for my temperamental dislike of Committees, which take up a great deal of our time when we might be more usefully occupied, but I support the idea that there should be an opportunity for those of us with particular concerns to go and discuss them at some length.
The most interesting point to be raised in the debate, apart from the informative description of the Procedure Committee's idea that we should have five Committees, was the remark made by the hon. Member for Hamilton (Mr. Robertson), who proposed a Grand Committee. Perhaps he can say whether the Government's inability to proceed with the Procedure Committee's suggestion has something to do with Opposition Members pushing for a Grand Committee. By failing to co-operate with the idea of producing enough Members for the Committees, perhaps the hon. Member for Hamilton is actually trying to move towards one Grand Committee to consider the enormous amount of legislation. If that were so, would he not agree


that the Grand Committee would have to sit as often and as long as the House to pay proper attention to the amount of legislation that the European Community puts our way?

Mr. Robertson: I do not think that this is the time or place—particularly not the time—for a lengthy debate on the idea of a European Grand Committee, which I think is sound. However, for the sake of accuracy and so that the hon. Member for Billericay (Mrs. Gorman) can return to other aspects of her speech, the Grand Committee proposal is not the reason why the Leader of the House is here today with his suggestion for two Committees. That was not the motivation behind the workings of the usual channels.

Mrs. Gorman: 1 thank the hon. Gentleman for his remarks. As my hon. Friends have suggested in their interventions, I am still intrigued to know how the Government came to their conclusion that two Committees were enough. I hope that my right hon. Friend the Leader of the House will say whether there must be 13 people on the Committees or whether, instead, there could be three Committees of eight, nine or even seven, especially as the quorum is only three, presumably the Minister, the Opposition spokesman and A. N. Other—[HON. MEMBERS: "The Whip."]—and the Whip. All those details have yet to be made clear, and I am concerned that the Government should pay due attention to the need to scrutinise the information adequately.

Mr. Favell: My hon. Friend has addressed the issue of the number of Committees, which is important, and I have asked about it. Will she consider amendment (d), tabled by my hon. Friend the Member for Southend, East (Mr. Taylor) on the necessity of the Committees, no matter how many of them there are, reporting back to the House? If they do not, the power will not lie with the scrutineers, but with those who choose them. The power will be with the people who decide the make-up of the Committees, rather than with the House, and the power of the House will be taken away.

Mrs. Gorman: My hon. Friend makes his point perfectly well. I will not continue with my remarks, as I see my right hon. Friend the Leader of the House anxiously looking at the clock, but I hope that, when he winds up, he will make clear the reasons for the Government's decision, as I am not clear what their motives really are.

Mr. Bowen Wells: I shall make three quick points. First, I support my hon. Friend the Member for St. Ives (Mr. Harris) in his disquiet at the choice of Chairman for the Committees. They would benefit greatly from permanent Chairmen, not ones chosen ad hoc from the Chairman's Panel. There has been plenty of talk about that, so I will not pursue the matter, but I believe that there is a need for permanent Chairmen.
The automaticity of the proposed procedure will make it very difficult for the House to intervene, despite the fact that very serious issues, with political ramifications, ought to be discussed on the Floor of the House. The report-back situation, which was mentioned by my hon. Friend the Member for Stockport (Mr. Favell), is very important. If one of the Committees disagreed with the position that a Minister intended to take at the Council of Ministers, a

difficult situation would arise. It would be very difficult indeed to proceed with a measure with which Parliament disagreed.
Lastly, I want to know how a Minister, having been ignored or defeated by the Council of Ministers, would report to the House.

Mr. MacGregor: In the few remaining minutes, I shall respond to as many points as possible.
This has been a very interesting debate. I am glad that so many of my hon. Friends and Opposition Members support—albeit sometimes with reservations—the course on which we are embarked.
My hon. Friends the Members for St. Ives (Mr. Harris), for Saffron Walden (Mr. Haselhurst), for Harrow, East (Mr. Dykes) and for Honiton (Sir P. Emery) all agree that it is right to get on with these proposals, as they represent a considerable improvement. I certainly agree with my hon. Friend the Member for St. Ives that scrutiny will be improved and intensified. I am grateful for his support.
The hon. Member for Hamilton (Mr. Robertson) asked whether non-members of the two Committees would be able to question Ministers and, if so, what priority their questions would have. Indeed they will be able to put questions. The degree of priority will probably lie with the Committee Chairmen. No doubt the Committees will evolve their own ethos. The hon. Gentleman asked whether Ministers would be full members. No, they will not. However, they will be questioned in the hour's session, and they will be able to sum up and respond to points in the normal way.
The servicing of these Committees—another point that the hon. Member raised—will be similar to that of other Standing Committees. Indeed, these will be Standing Committees, not Select Committees.
My hon. Friend the Member for Southend, East (Mr. Taylor) raised a number of points, with which I shall deal as quickly as possible. He made several critical comments about the number of hon. Members involved. I repeat that any hon. Member will be entitled to attend and participate in Committee meetings. Clearly, Members will want to hear the debates on documents in which they are interested. Scrutiny of documents will be longer than it is under the present arrangements.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) and my hon. Friend the Member for Saffron Walden wondered just how many Members would attend for some of these scrutiny operations. Their doubts may well be justified: that is why we set the quorum at a reasonable level. I hope that we are wrong; I hope that 149 of the colleagues of my hon. Friend the Member for Saffron Walden will attend each Committee meeting. We shall have to wait and see, but I doubt it very much. Certainly we are providing more opportunity for participation. In any case, this is one of the matters that may be subject to review in the light of experience.
The hon. Gentleman made a great deal of the point that this would not enable the House to examine European issues. Indeed, he went way beyond the documents, to deal with such issues as agricultural surpluses. The House, he said, would not be able to examine these matters sufficiently closely. He knows as well as I do that there are many other means of addressing wider issues. They can, for instance, be dealt with by Select Committees and on the


Floor of the House, as is done pretty frequently. For instance, on Thursday we shall have an all-day debate on the important subject of economic and monetary union.
It is a substantial misrepresentation of the situation to suggest that the major European issues will be dealt with solely by these Committees, or that the House's general scrutiny of European matters will be confined. Far from it —the Committees will be concerned with particular European Community documents that the Select Committee recommends for further consideration. The documents that are most important politically will still be taken on the Floor of the House.
I spent about four years attending intense debates in the Council of Agriculture Ministers and I experienced the decision taking, the policy making and everything else. The House probably scrutinises most of the European proposals more than most, if not all, of the other European legislatives. This is a great help to Ministers, and I believe that this proposal will be an even greater help. The Minister who has been questioned and has listened to views for an hour and, following that, to a debate for an hour and a half in Committee, will have his hand strengthened for when he goes to the Council of Ministers, because he will have a greater knowledge of the views taken by Parliament. That opinion is based on my experience.
As my hon. Friend the Member for Hertford and Stortford (Mr. Wells) knows, in the Council of Ministers, decisions are often taken on a majority basis, and if we cannot make our view prevail on any issue, there is not a great deal that the scrutiny Committees can do. Il was never intended that these Committees would deal with that issue.
I confirm to the hon. Member for Newham, South (Mr. Spearing) that I intend to announce forthcoming Committee debates in the weekly Business Questions. That will strengthen the position of the Committees, and will alert hon. Members who are not on the Committees to what will happen, and enable them to adjust their diaries accordingly. As he rightly said, it will also bring the Committees more publicity.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) raised, both in an intervention to me and in his own speech, a point about the division of the subjects between the two Committees. This is also something that can be adjusted in the light of experience, and each session will be different. In the last Session, 23 scrutiny debates would have fallen to Committee A, and 19 to Committee B, so I hope that we shall get balance right.
My hon. Friend the Member for Honiton has great knowledge of these matters, so I listened to his speech with great interest. I accept that the Committees that we are proposing are different from those proposed by the Procedure Committee, of which he is Chairman. There can be a number of views about how we set up these Committees, and about their membership.
I hope that the fact that any hon. Member will be able to come to these Committees—I keep stressing this point because it is an important feature—will mean that some of the worries about their being simply confined to the 13 members of each Committee will be overcome. I am grateful to my hon. Friend for saying that it is better to get the Committees up and running so that we get the experience, because they are an improvement on the

present system. I am also grateful for all the work that he and his Committee have done in enabling us to get to this point.
I am happy to restate my assurance that I am prepared to review this at the end of the Session—a point about which my hon. Friend asked. Many of the hon. Members here tonight will wish to express their views in the light of the experience of the next six months. I hope that we can get on with these Committees so that we can gain that experience.
Amendment made: (b), after 'thirteen', insert
`in paragraph (4), line 24, leave out "two" and insert "three".'. —[Mr. Spearing.]
Amendment proposed: (d), at end add
`in paragraph (8), line 65, at the end add "The Committee shall also have power to report to the House its conclusions on any matter arising out of its consideration of documents referred to it under the provisions of the Order.".'.—[Mr. Teddy Taylor.]
The House proceeded to a Division; but no Member being willing to act as Teller for the Ayes, MR. DEPUTY SPEAKER declared that the Noes had it.
Amendment negatived.
It being more than one and a half hours after the motion was entered upon, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [18 January], to put the Questions necessary to dispose of proceedings on the motion, as amended, and of the motion relating to European Community documents.
Ordered,
That the following Amendments be made to Standing Order No. 102 (European Standing Committees):
in paragraph (1), line 1, leave out 'three' and `two';
in paragraph (3), line 15, leave out 'ten' and insert `thirteen';
in paragraph (4), line 24, leave out 'two' and insert `three';
in paragraph (6), line 34, leave out 'several' and leave out the table following pargraph (6) and insert the following table:


European Standing Committees
Principal subject matter



Matters within the responsibility of the following Departments—


A
Agriculture, Fisheries and Food; Transport; Environment; and Forestry Commission (and analogous responsibilities of Scottish, Welsh and Northern Ireland Offices);


B
Other Departments


Ordered,
That—

(1) European Community Document No. 6701/90, relating to pollution from diesel engines, which stands referred to European Standing Committee B, shall instead stand referred to European Standing Committee A; and
(2) the following Documents which stand referred to European Standing Committee C shall instead stand referred to European Standing Committee B:

European Community Documents Nos. 8353/90, relating to customs controls on baggage, 8073/90, relating to organisation of working time, 9025/90, relating to nuclear fusion research, 6703/88, relating to burden of proof in the area of equal pay and treatment for men and women, 8461/88, relating to import duties on weapons and military equipment, 8162/90, relating to procurement procedures of water, energy, transport and telecommunications undertakings, 8075/90 relating to safety on temporary work sites, 8792/90, relating to protection of pregnant women at work, 8460/90, relating to protection of individuals in relation to processing of personal


data in the Community and information security, 10149/90, relating to the promotion of energy efficiency in the Community, and the Commission Report on the benefits and costs of economic and monetary union.—[Mr. MacGregor.]

PUBLIC ACCOUNTS

Ordered,
That Mr. Jeff Rooker be discharged from the Committee of Public Accounts and that Mr. Norman Hogg be added to the Committee.—[Mr. Kirkhope]

BROADCASTING, &c.

Ordered,
That Joan Ruddock and Mr. Brian Wilson be discharged from the Select Committee on Broadcasting, &amp;c., and that Mrs. Lin Golding and Mr. Geoffrey Lofthouse be added to the Committee.—[Mr. Kirkhope]

ARMED FORCES BILL

Ordered,
That Dr. Charles Goodson-Wickes be discharged from the Select Committee on the Armed Forces Bill and that Mr. Julian Critchley be added to the Committee.—[Mr. Kirkhope]

PETITION

Opencast Mining (Rigside)

Mr. Jimmy Hood: I wish to present this petition on behalf of the community of Rigside, a small village in my constituency, which objects to the imposition of a public inquiry by the Secretary of State for Scotland to again consider the planning application of L. A. W. Mining Company to mine opencast on the Townhead site near Rigside.
The Clydesdale district council unanimously rejected this application in the first instance, but was overruled by the Secretary of State for Scotland, and the court in Edinburgh ruled that his decision to overrule the council's objection was flawed and in breach of planning law. In presenting this petition, I express my full support to the local community of Rigside, and in particular the Rigside community council, for their unstinting efforts to prevent such a disastrous development.
I commend the petition to the House. It reads:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled.
The Humble Petition of the people of Rigside and others sheweth.
That the Community of Rigside is opposed to L. A. W. Mining planned extraction of fire clay and coal by open cast method at Townhead Farm in its midst.
That a clear reason for refusal of planning permission for this development has been identified during Court of Session proceedings.
That the planned development is unreasonable when National Guidelines are observed.
That it were an ill precedent for future development in this valley, with its high reserves of coal and rich with its mining tradition, should instance of this sort of mineral extraction be approved.
Wherefore your Petitioners pray that your Honourable House now seek a determination from the Secretary of State for Scotland in acknowledgement of the Judges' findings without recourse to further inquiry.
And your petitioners as in duty bound will ever pray.
I beg leave to present the petition.
To lie upon the Table.

Police (Derbyshire)

Motion made and Question proposed, That this House do now adjourn—[Mr. Kirkhope.]

Mrs. Edwina Currie: I rise to call attention to the difficulties faced by Derbyshire police force, currently under the management of Derbyshire county council. I am pleased to recognise the presence of my hon. Friends the Members for Derbyshire, West (Mr. McLoughlin) and for Derby, North (Mr. Knight) here tonight. I have no complaint against the police themselves. Derbyshire police officers, men and women, uniformed, detectives and civilians, are outstanding people and perform their difficult task in that county with good humour, courtesy and competence. Indeed, police at all levels are well respected and trusted by my constituents. I am also glad to see that my hon. Friend the Member for Amber Valley (Mr. Oppenheim) here tonight.
The problem is that the police in Derbyshire are forced to do their job hampered and hindered quite deliberately by the county authority. The results are truly appalling, as demonstrated in the recent savagely critical report by Her Majesty's inspector of constabulary published in December 1990, based on an inspection carried out between 16 and 20 July 1990. For example, in paragraph 1.8, the inspector says:
The picture of Derbyshire police force portrayed during the inspection is mixed, but all too often one of deterioration of infrastructure and morale.
More than 40 urgent recommendations are listed in that report.
Derbyshire covers 1,000 square miles and the police force has to look after 1 million people. Officially, the establishment is a full one. We have 1,791 officers in post out of an establishment of 1,793. But first of all, the establishment is not enough. Each Derbyshire police officer polices 63 more people than the national average. The last time that there was any increase in police numbers was in 1987. Since then, the police committee has refused to guarantee its part of the funding for increases, so we have lost all the increases.
Nor does the problem relate only to uniformed officers. In Derbyshire, we are particularly dependent on civilians, with a higher than average civilian establishment to population size. But worse, the civilian posts are not filled either and there is a continual shortfall. The uniformed officers then have to do the job of the civilians. For example, there should be 309 traffic wardens. That is the official establishment. In post at the time of the report there were 84. As a result, police officers are frequently required to carry out traffic warden functions. Similarly, there should be 14 more control room operators, who are supposed to be civilians according to official Derbyshire police force management policy—but there are not, so the job has to be done by uniformed officers.
Many civilian posts have been outstanding since 1988 and the average length of time taken to fill a civilian post is six months. That is expensive, it withdraws beat officers from their duties and it means that police are frequently not visible at all on the streets of Derby and in the Derbyshire villages.
That also increases the strain on all the officers. As the report shows, the number of days lost through sickness has been increasing steadily—an increase of more than 19 per


cent. between 1987 and 1989. More worrying, the time lost through injury on duty jumped by 38 per cent. in a year. The situation is a matter of considerable concern to all our constituents and most of all to those serving in the force.
The report quotes many similarly worrying features about staff, equipment and buildings. The fingerprint bureau should have 13 officers, but it has an establishment of nine with only six in post. As paragraph 4.30 of the report says, the
position is untenable and the department teeters on the brink of complete collapse.
We have only 16.4 marked vehicles per hundred officers, whereas similar forces have 20.5—25 per cent. more. There are no armed response vehicles. There are no trained accident investigators. There is insufficient protection for the police in cases of public disorder. The police computing facilities are inadequate, unsafe, inefficient and obsolescent. The main processes on the command and control system failed 128 times in a year. The inspector says:
The normal workload of the computer grossly exceeds the design capacity by 227 per cent.
The casualty bureau is totally inadequate and we are told that the
system would fail under any realistic pressure".
Some 45,000 crime reports have to be read and analysed manually, which is almost unbelievable in a force this size. There is no female police surgeon. There are inadequate facilities for rape and child abuse cases. No drug squad member is trained to nationally recognised standards. Derbyshire constabulary lacks surveillance capacity and has only limited access to vehicles suitable for covert operations.
It is not just personnel and equipment that create problems, but buildings as well. The last new police station was completed in 1981. The county failed to submit any building plans from 1987 onwards. One station in Derby, Peartree, which was intended to have a 20-year life when it was erected in 1945 but is still there, is
nearing the point of total decay
and
is an insult to police, civilians and the public
with foul toilets, a temperature in the office at the time of inspection of 98 deg F, a badly leaking roof and various other major problems. The inspector says that the
state of repair of police buildings is generally quite extraordinary.
But it is not that money is not available. Indeed, he goes on to say:
The fact that moneys allocated and approved for building maintenance have been consistently underspent for the past four financial years seems irreconcilable with the building deterioration evident during the inspection.
In fact nearly £168,000 has been underspent in those budgets in the past four years. The inspector is also extremely critical of the state of police housing. In fact, savings are made on the police budget and the report says very cautiously in paragraph 2.72 that these savings
may be spent in another area of County Council concern.
In other words, the county has the money, but it chooses not to spend it on the police.
In one area, Derbyshire county council is very careful with money—other people's money. It charges £22 for a neighbourhood watch sign or £112 if it comes with a pole. In the HM inspector's words, this
appears a direct disincentive to this priority crime prevention initiative.

As a result, complaints are up by 22 per cent. and only 57 per cent. of respondents to Derbyshire county council's own survey in 1989 reported satisfaction with the police. I must say that I think it is the height of cynicism for Derbyshire county council to spend public money doing a public opinion survey on attitudes to the police when the main problem comes from the county's failure to spend money allocated to the police.
Worst of all, crime rates are climbing in Derbyshire, in 1989 crime was up by 13 per cent. on the previous year. That is higher than in similar forces. In the six months before the inspection in 1990, crime climbed by a further 22 per cent. and the detection rate was falling. Indeed, the detection rate was well below that of similar forces. This is partly because we do not have enough police and partly because they are not well equipped. It is also partly became they are forced to do the wrong jobs. Most of all, it is because the police do not have the support of those responsible for the Derbyshire county council and the police authority.
The problems mainly arise because of the control systems exercised over the police, which are unbelievably bureaucratic and cumbersome. I quote the report again:
In Derbyshire budgetary control has yet to be devolved to the Chief Constable.
That is normal practice elsewhere. Constant interference by councillors means that the chief constable has no opportunity for virement or to manage his budgets efficiently.

Mr. Harry Barnes: rose—

Mrs. Currie: No, I will not give way.
Any purchase of more than £3,000 must be approved by the police committee. The same applies to any purchase of more than £300 if it is a piece of electronic equipment. Such a thing as a new telephone line must go back to the police committee for reapproval. It is noticeable, of course, that these committees are extremely well staffed, and their staffing has increased. "Management" means holding reviews and producing dozens upon dozens of reports, turning the police body over and poking it until it is red raw. The reports are then put on the shelf and remain stuck in the system for years. These include urgent items which are 100 per cent. funded by the Home Office.
According to the inspector, the bureaucratic requirements of the county council and the police committee are
a major obstacle to the efficient management of the force.
He talks about the
parsimonious fettering of police management
which has taken its toll of both innovation and morale. I believe that it is more than parsimonious and more than a major obstacle—I believe that it is reckless, dangerous and unbelievably stupid.
It is nothing to do with capital controls or expenditure limits—these affect every police authority in the country and none has the mess that we have in Derbyshire. It has nothing to do with charge capping, which was brought in after the inspections which led to this report. The problems have been going on for a very long time.
There has been a virtual standstill in developing the constabulary and its resources for the last eight years.
That is a direct quote from paragraph 1.9. In those eight years other overall staffing in the county rose by more than 8,000, and the county budget topped £500 million—one of the largest in the country. There is no shortage of money in Derbyshire.
The fact is that certain key people in our county hierarchy are deeply hostile to the police for political reasons. They believe that the police should be accountable. They want a police force and a chief constable who will do their bidding. All the financial and administrative procedures are designed to that end. We saw it during the miners' strike, when I had to insist to the Home Secretary that my working miners had full protection in order to exercise their right to work. We saw it during the hounding from office of Chief Constable Alf Parrish. The expenditure row was blown up out of all proportion and led to his early retirement, his subsequent breakdown, and his tragic early death—a broken man—just a few months ago. That death should be on the consciences of Councillor Bookbinder, leader of Derbyshire county council, and his henchmen, for the rest of their lives.
When Mr. Parrish's replacement—an internal appointee who did his best—retired last year, Mr. Bookbinder attempted several times, with complete cynicism and great determination, to impose his chosen candidate as chief constable. He was another internal candidate, and no doubt a very good policeman, but he was not approved by the Home Office. Mr. Bookbinder tried, but at last—thanks to my right hon. Friend the Home Secretary and my hon. Friend the Minister of State—he failed. We now have a new chief constable, John Newing from the Metropolitan police, to whom I and my hon. Friends offer our best wishes and support.
Armed with the report, and with the continued backing of my right hon. Friend the Home Secretary, I hope that we may now see progress. Tonight, I ask my hon. Friend the Minister to say what action has been taken to put matters right since the report was published. A recent Home Office letter stated that certain measures had already been put in hand. I shall be grateful if my hon. Friend the Minister will say what they are. What further action is in the pipeline? When will the next inspection be made, because the present situation cannot be allowed to continue much longer? The county says that the previous Her Majesty's inspectorate inspections were favourable. If that is true, it is scandalous. I hope that my hon. Friend the Minister will comment on that claim.
When the Government have a role in setting and monitoring police standards but the powers to run the establishment are delegated by law to a local authority, may we have an assurance that the Government will do everything necessary to guarantee proper maintenance of standards in relation to the police and crime prevention in Derbyshire so that my constituents, those of my hon. Friends, and everyone in the fine county of Derbyshire, will be properly cared for?

Mr. Phillip Oppenheim: I thank my hon. Friends the Member for Derbyshire, South (Mrs. Currie) and the Minister for allowing me to make a short contribution. The overview given by my hon. Friend the Member for Derbyshire, South was so comprehensive, and her indictment of Derbyshire county council's political interference in its police force so devastating, that I have little to add.
When Derbyshire county council has been criticised over the years for wasteful spending on a variety of pet political projects, such as the now defunct millionaire's playground, into which the council invested an unknown amount of money, and publicity such as—

Mr. Deputy Speaker (Mr. Harold Walker): Order. What does that have to do with Derbyshire police?

Mr. Oppenheim: When the county council has been criticised for such expenditure, it has argued that it at least runs its administration efficiently. The report blows a large hole in that rickety argument. It is probably the most devastating indictment of a council's administration. It is certainly a devastating indictment of its interference in the police force.
The report says that the way that the council acted verged on the unconstitutional, and reveals that Derbyshire county council, far from being an efficient authority, is grossly inefficient and has no regard for administration and value for money.
One of the claims made by those who defend the council is that the situation all has to do with underfunding, under-resourcing and poll-tax capping. The truth is that Derbyshire county council is one of the highest-spending authorities per head in the country. County councils such as Surrey spend less, yet it has the same problems in administering its police force.

Mr. Deputy Speaker: Order. It is unfair to the House for an hon. member to use another hon. Member's Adjournment to widen the debate beyond the subjet that is on the Order Paper. I hope that the hon. Gentleman will now address his remarks to the question of Derbyshire police force.

Mr. Oppenheim: Funding relates directly to Derbyshire police force, because one of the arguments is that the force is underfunded and that that has caused the problems which have given rise to this devastating report by the inspectorate.
I seek to refute that argument by asserting that Derbyshire has been extremely well funded and is one of the highest spenders per head. Therefore this has nothing to do with funding and everything to do with priorities. Other counties spend far less per head, yet manage to spend more on their police force or have fewer problems with its administration. This has everything to do with priorities because Derbyshire county council has been more than happy to put its money into many other areas but the police force has been starved of funds. The council has been willing to put money into Insight and is considering putting Insight on to video, yet too often simple requests for extra funding for the police have been turned down in a manner which has been prejudicial to the well-being and the running of Derbyshire police force.
An early-day motion on this subject mentions the need for democratic accountability. The problem with Derbyshire police force is not that a lack of democratic accountability is undermining the police force, but that local councillors, who are using their democratic role to politicise the force, are undermining it.
The county council has consistently run Derbyshire county constabulary in a fashion that verges on turning it into a department of the council, which is virtually unconstitutional and an absolute disgrace.

Mr. Harry Barnes: The early-day motion that the hon. Gentleman referred to is in my name and it points out that the report is a hatchet job, which attempts to undermine the police committee and democratic operations in the area. The report lacks professionalism and the evidence that goes with it is full of inconsistencies and takes no account of any of the financial problems under which the authority has to operate. Derbyshire has a fine county council and a fine police force, and I am sorry to hear the hon. Member attacking both.

Mr. Oppenheim: The hon. Gentleman is acting his role as the poodle of the hon. Member for Bolsover (Mr. Skinner) in his absence and is way over the top in his support of the council. People in Derbyshire do not think that they have a fine county council—they are sick and tired of it and cannot wait for the day when we get rid of Councillor Bookbinder and his motley crew, who have done so much damage to Derbyshire police force. They have also immensely damaged the people of Derbyshire.
The report, which is not a political report but was compiled by a highly respected independent inspectorate, makes it clear that the police have been politically interfered with by the local councillors who run Derbyshire county council, in a way which is prejudicial to the well-being and the good policing of the county. The sooner the hon. Gentleman accepts that fact and stops defending Councillor Bookbinder and his crew, merely because they happen to be in the same party, the better. Derbyshire county council is an absolute disgrace and the way in which it has tried to interfere with the police force is also a disgrace.
If a Labour Government got in and tried to increase what they term the "political accountability" of police forces, we would end up with an even worse situation. There would not merely be the sort of political interference which we have at present, but police committees and elements of the police force would be packed with the political friends of the likes of the hon. Member for Derbyshire, North-East and Councillor Bookbinder. If they had their way I should not be surprised if people like David Skinner, the chairman of Derbyshire Labour party, who has already been given one plum county council job, did not find their way into a police authority job.
That is the danger of the sort of political interference which has taken place within Derbyshire constabulary, and which we should see even more of if Opposition Members had their way. Such politicisation of the police force is immensely dangerous, and I suspect that the majority of Opposition Members, who have a modicum of sense, do not want it.
This report is undoubtedly the most devastating indictment of the way in which a police force is run that has ever been produced in this country. It behoves Opposition Members to take some note of that and to be concerned about it, instead of blindly defending their political mates in the county of Derbyshire. I believe that the day is dawning when we shall be shot of Councillor Bookbinder and his motley crew, and I have a suspicion that we have not much longer to wait.

The Parliamentary Under-Secretary for the Home Department (Mr. Peter Lloyd): I congratulate my hon. Friend the Member for Derbyshire, South (Mrs. Currie) on securing tonight's debate. She is rightly concerned

about the state of policing in Derbyshire; so, clearly, are a number of my hon. Friends who represent Derbyshire seats and who are present tonight. I know that my hon. Friend the Member for Amber Valley (Mr. Oppenheim)—who has just spoken to considerable effect—and my hon. Friends the Members for Derbyshire, West (Mr. McLoughlin) and for Derby, North (Mr. Knight) a re worried about the recent report by Her Majesty's inspectorate of constabulary, which presented such a bleak and disturbing picture, as they took the trouble to tell me so beforehand. Although I note that the hon. Member for Derbyshire, North-East (Mr. Barnes) is also interested in the matter—I have read his early-day motion—he did not contact me; nevertheless, I listened carefully to his intervention.

Mr. Harry Barnes: rose—

Mr. Lloyd: I will give way briefly, but, as the hon. Gentleman knows, I have little time. On the last occasion when I faced him from the Dispatch Box in an Adjournment debate, his remarks took up almost all the time available.

Mr. Barnes: The Minister says that I did not contact him about the issue. I contacted the hon. Member for Derbyshire, South (Mrs. Currie) to ask whether I could be allowed a short period in which to make a speech—

Mrs. Currie: And I said no.

Mr. Barnes: The hon. Lady said no: obviously, she was frightened of what she might hear. As it was her debate, there was no point in my approaching the Minister to discuss the issue; but I will certainly approach him I o discuss the content of that disgraceful, unprofessional report. The person who produced it is also disgraceful: he used it to undermine a police committee, and it is inconsistent with all the earlier reports.

Mr. Lloyd: That may be the hon. Gentleman's view, but this is my hon. Friend's Adjournment debate, and it is her privilege to determine who should contribute to it.
As my right hon. Friend the Home Secretary said when the report was published, it was without doubt one of the worst reports on any police force; but before I discuss the report itself, and the action that we are taking, I must draw an important distinction between the Derbyshire constabulary and the police authority.
The members of the Derbyshire constabulary have done an excellent job in maintaining standards of service as well as they have in what can only be described as the most difficult circumstances. My right hon. Friend and I have great admiration for the way in which it has managed to maintain a high standard of professional policing while buildings deteriorate around it and the police authority imposes absurd levels of bureaucratic control on the police budget.
It is with the police authority that the responsibility lies. Under section 4 of the Police Act 1964, it is the police authority that has the duty
to secure the maintenance of an adequate and efficient police force for the area",
and, as the inspection report shows, it has come perilously close to failing in that duty.
My hon. Friend the Member for Derbyshire, South has already drawn the House's attention to the manifold failings of the police authority—the failure to devolve any significant financial responsibility to the chief constable;


agreed expenditure having to be reapproved through a labyrinth of council committees; civilian posts left vacant, or taking six months to fill; trained police officers being taken off the streets to cover for civilian vacancies; 19 additional posts approved by the Home Secretary for 1990, but turned down by the council; maintenance budgets consistently underspent while broken windows remain unrepaired—and so on, and so on. The report is a published document, as all HMI reports now are, and the details are set out in it by the regional HMI better than I could hope to do tonight. It repays careful reading—particularly, I suggest, by the hon. Member for Derbyshire, North-East.
Let me pull out just one chastening detail. Paragraph 3.5 points out that the casualty bureau is antiquated and that the four incoming telephone lines would be inadequate to deal with the demands of a major disaster. The HMI concludes that
the system would fail under any realistic pressure".
The House has listened too often to statements from Ministers detailing the horrific disasters which have befallen us in recent years. None of us can say that it will not happen in my county, and we know the pressure of thousands of phone calls from anxious relatives. Therefore, I find the complacency of Derbyshire frightening and inexplicable.
What is the response of Derbyshire county council? It is to blame the Government for cuts in funding. Well, I suppose they would say that. But what puzzles me is this: if it is all the fault of the Government, as they say, why is it only Derbyshire that faces such extreme problems? The same funding principles apply across the country, but Her Majesty's inspectorate reports for other counties present a very different picture, with an effective partnership between the police authority and its police force. There is no magic that uniquely puts Derbyshire in a worse position than its neighbours. The issue is simply that Derbyshire county council, through its police authority, exercises a very different set of priorities on policing.
It is instructive to look closely at how Derbyshire adjusted its budget for 1990–91 in response to capping. The

county council's total original budget was 40 per cent. above the standard spending assessment, but the original police budget of £29 million was marginally below the police SSA of £29.6 million. No cuts at all need have been made in the police budget, but the council imposed a uniform cut of 3.5 per cent.—nearly £2 million—to finance its overspending in other quarters. The council was well aware of the damage that would do to the police: last August, the chief constable, the clerk to the police authority and the county treasurer wrote jointly:
The reductions for the constabulary will cut deeply into the level of service provided to the people of Derbyshire.
The hon. Member for Derbyshire, North-East would no doubt complain about the effect of reduction in capital provision, but the reduction in capital provision applies to forces across the country, not just to Derbyshire. Derbyshire's protests sound a little hollow when one remembers that the authority has not seriously attempted to upgrade its police building stock for many years.
Derbyshire tells us that the inspectorate's criticism has come out of the blue and that things cannot have deteriorated so swiftly since the previous year's inspection. Indeed they did not. That is why letters to the chairman of the police committee in 1987, 1988 and 1989 drew attention to a range of serious concerns about delays in filling vacancies, the budget review process and the absence of a building programme. It is the sustained failure of the police authority to take action on these matters that has led to the present deplorable situation.
It is clear that I shall not have time to finish the remarks that I wanted to make in reply to my hon. Friend the Member for Derbyshire, South. In summary, the inspectorate is staying closely in touch with Derbyshire. A number of measures to improve efficiency have already been put in hand. The responsibility for meeting these criticisms rests firmly with the Derbyshire authorities, and my right hon. Friend the Home Secretary will be receiving reports on the matter. If the situation does not improve, he has a responsibility to make sure that in the end it does; but I hope that it will not come to that.
Question put and agreed to.
Adjourned accordingly at seventeen minutes to One o'clock.